Market Regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs90 lakh on Urja Global Ltd (noticee 1) and 15 of its related entities, including the company's top executives like the managing director (MD), chief executive officer (CEO), whole-time directors (WTDs) and compliance officers, for failing to comply with the disclosure norms under the SEBI Listing Obligation and Disclosure Requirements Regulations (LODR Regulations).
In an order, Asha Shetty, adjudicating officer (AO) of SEBI, says, "The role of senior management, including the MDs, CEO and WTDs, is integral to the efficient and effective governance of a company. As custodians of corporate governance, their failure to ensure adherence to regulatory requirements is a serious breach of responsibility. Despite the critical nature of their roles, these individuals repeatedly failed to discharge their duties, leading to sustained violations."
The other entities involved are: Honey Gupta (noticee 2), Yogesh Kumar Goyal (noticee 3), Aditya Venkatesh (noticee 4), Dheeraj Sisodia (noticee 5), Mohan Jagdish Agarwal (noticee 6), Sunil Kumar Mittal (noticee 7), Rajiv Gupta (noticee 8), Mita Sinha (noticee 9), Payal Sharma (noticee 10), Gaurav Agarwal (noticee 12), Akshay Mehta (noticee 14), Manisha Jain (noticee 15), Niyukti Singh (noticee 16) and Kanika Arora (noticee 18).
SEBI's investigation was triggered after several complaints raised concerns regarding the authenticity of announcements made by Urja Global, specifically those concerning various memoranda of understanding (MoUs) and joint venture (JV) agreements.
SEBI's findings revealed that Urja Global and its associated entities, including key executives and compliance officers, violated multiple provisions of the LODR Regulations. The main allegation centred on incomplete disclosures, especially regarding MoUs and JVs with several entities, including, Tesla Power India Pvt Ltd, Malbro Group, Motors India Pvt Ltd and Shenxian Ganghang Automobile Sales Co Ltd (China), which lacked necessary details as per the SEBI regulations.
According to SEBI, the company failed to provide clear and comprehensive information about these agreements which were crucial for shareholders to assess the material impact on the company's business.
The SCN (show-cause notice) pointed out that, except the announcement with Tesla Power India Pvt Ltd, Urja Global failed to disclose key terms of its other MoUs, which were considered significant in nature, thereby breaching Regulation 30(2) of the LODR Regulations. Moreover, compliance officers—Mr Mehta, Ms Jain, Ms Singh and Ms Arora—were accused of neglecting their duty to ensure accurate and authentic disclosures, violating Regulation 6(2)(c) of the LODR Regulations.
The violations extended beyond inadequate disclosures. The board of directors (BOD) of Urja Global, including independent directors, were found to have failed to exercise due diligence while endorsing the MoUs or JV agreements. Instead of critically evaluating the agreements, they merely accepted the management's representations without asking for further details. Key executives, including MDs Honey Gupta and Dheeraj Sisodia, were also found guilty of withholding crucial information from the board and failing to ensure transparency in the company's dealings.
A significant finding was the questionable validity of several MoUs, especially those related to electric vehicles (EV)-related activities.
SEBI's investigation revealed that the company entered into agreements for such activities in 2019 and 2020 without authorisation from the company's memorandum of association (MOA), which was amended only in August 2021 to include EV-related activities. This lack of prior authorisation rendered the agreements ultra vires, thus violating SEBI regulations and the company's governance framework.
Further scrutiny of the JV with Shenxian raised serious concerns. The investigation unearthed several red flags, such as Shenxian's bankruptcy, lack of verifiable representatives and the absence of an official website. Despite these issues, the MOU signed with Shenxian was presented to the board and SEBI as a legitimate business venture which the market regulator deemed to be a misleading forward-looking statement designed to deceive shareholders.
SEBI also flagged the company's MOU with FVM Industries (India) Ltd which was found to be non-genuine. Despite FVM being legally registered, it lacked the operational capacity to fulfil the claims made in the MOU regarding the sale of 100,000 e-scooters worth Rs480 crore. The absence of critical operational presence and unsubstantiated claims reinforced suspicions of fraudulent intent, SEBI says.
Urja Global's failure to disclose crucial details about its Nashik plant project also violated SEBI's circular and Regulation 30 of LODR which mandates complete and transparent disclosures. The company's annual reports from FY16-17 to FY21-22 were also found to have inadequate disclosures regarding the financial impact and risks of the MoUs.
SEBI concluded that Urja Global, along with its directors, compliance officers and other associated entities, had failed to meet regulatory requirements, violating multiple provisions under the SEBI Act and LODR Regulations. The company was penalised Rs90 lakh for these lapses which involved misleading shareholders, inadequate disclosures, and governance failures.
As a result, Urja Global was fined Rs40 lakh, while Yogesh Kumar faced a penalty of Rs10 lakh. Honey Gupta, Aditya Venkatesh and Dheeraj Sisodia have each been penalised Rs 6 lakh. Mohan Agarwal, Sunil Mittal, Rajiv Gupta, Mita Sinha, Payal Sharma and Gaurav Agarwal have all been penalised Rs3 lakh each. Additionally, Akshay Mehta, Manisha Jain, Niyukti Singh, and Kanika Arora were fined Rs 1 lakh each.
In May 2022, SEBI, for the first time, asked Urja Global—which is found guilty of price manipulation and false statements—to get a 'certificate of authenticity' for its disclosures to the exchange. In the 'humiliating action', the company needed to get a company secretary to verify its statements except for accounts.
SEBI, in May 2022, also barred for two years Urja Global and the company directors and KMPs, Yogesh Kumar Goyal, Sunil Kumar Mittal, Priya Bhalla and Avinash Kumar Agarwal, from markets. The company is also prohibited from accessing the securities market to raise money from the public.
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