Sebi Upholds Ban on Brightcom's Reddy
Feb 28, 2024 19:52
Sebi has confirmed the ban on Suresh Kumar Reddy, promoter of Brightcom Group Ltd, for irregularities in share allotments. The regulator also upheld restrictions against other entities.
Photograph: ANI Photo
New Delhi, Feb 28 (PTI) Sebi on Wednesday refused to lift the securities market restriction imposed on Suresh Kumar Reddy, promoter of Brightcom Group Ltd, in a case concerning irregularities in preferential allotments of shares made by the company.
Besides, he would continue to be restrained from holding the position of a director or a Key Managerial Personnel in any listed company or its subsidiaries, Sebi said in its confirmatory order.
In its order, Sebi noted that the prima facie findings that Brightcom Group Ltd (BGL) had funded its own preferential allotments and had indulged in round tripping of funds continue to sustain.
"It has clearly emerged that in case of certain noticees, personal loans advances by them abroad to Suresh Reddy and his private companies / entities were being repaid in India through the mechanism of allotment of shares of BGL, a listed company, in preferential issues for free or at partial consideration, at the cost of public shareholders of BGL," Sebi said in its 40-page order.
The regulator said that the company had loose internal financial controls and its CMD (Reddy) was running the firm as a private concern. The CMD treated BGL as his private enterprise, disregarding the large number of public shareholders and their interests. There were no checks and balances within BGL of the manner in which financial transactions were recorded.
BGL made preferential allotment of shares in financial years 2019-20 and 2020-21. The company had issued warrants or shares on a preferential basis on four occasions and raised Rs 867.78 crore from a total of 82 allottees.
Modifying the direction against Narayan Raju, who was the company's CFO, Sebi said that restriction imposed on him regarding holding the position of a director or a Key Managerial Personnel in any listed company will apply only in respect of BGL and its subsidiaries.
Overall, the regulator has confirmed restrictions imposed, through the interim order issued in August 2023 against 20 entities, including Brightcom and Reddy. However, the directions against the remaining were either modified or revoked.
In its interim order, Sebi had barred Reddy from the securities market until further orders. Besides, Reddy and Raju were debarred from holding the position of a director or a Key Managerial Personnel in any listed company or its subsidiaries until further orders.
BGL was directed to ensure that P Murali & Co. and PCN & Associates, including their past and present partners, were not engaged with BGL or its subsidiaries in any capacity.
In addition, 22 entities were prohibited from disposing of shares of BGL held by them. Now, in a fresh direction, Sebi has confirmed this restriction against 18 entities and revoked the restriction against few entities, including Shankar Sharma.
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