Promoters face Major SEBI Penalties after Missing Key SAST Disclosures for Ultracab India Shares

Promoters face Major SEBI Penalties after Missing Key SAST Disclosures for Ultracab India Shares​

SEBI has finalized adjudication proceedings against twenty entities linked to Ultracab (India) Limited, imposing penalties due to alleged violations of the Substantial Acquisition of Shares and Takeovers (SAST) Regulations. The Adjudicating Officer found that the failure to submit mandatory disclosure reports on the Stock Exchange website constituted a clear breach of SEBI regulations regarding promoter group share changes.

Upholding Market Integrity: Details of SAST Regulation Breach​

The proceedings focused on alleged violations concerning the change in shareholding of the promoter and promoter group entities during the quarters ending September 2023 and December 2023. The SEBI examination noted that the promoter group's aggregate shareholding declined significantly from 62.12% at the start of the quarter to 27.90% by December 2023, involving changes exceeding 2% in 12 separate instances.

The investigation highlighted a critical failure: despite these significant stake changes being visible through Stock Exchange filings (SHP), manual disclosures required under Regulation 29(2) read with Regulation 29(3) of the SAST Regulations were not found on the relevant Exchange website. SEBI explicitly mandated that such disclosures must be made when an acquirer, along with persons acting in concert (PACs), executes a transaction leading to significant share changes.

Committee Findings: Differentiation in Liability and Compliance​

The adjudication order revealed distinct outcomes across the 20 noticees, highlighting the complex nature of regulatory compliance in corporate holdings. While some noticees maintained that the non-filing was purely technical—arguing that the depository was expected to handle the reporting via System Driven Disclosures (SDD)—SEBI rejected this defense.

The Board determined that "ignorance of law is no excuse." SEBI established that promoters and members of the promoter group were deemed PACs, and therefore, the failure to file required disclosures under SAST regulations constituted a violation. This determination held firm despite defenses citing legal precedents or claiming lack of intent to cause loss.

Absolution for Certain Entities: When Holdings are Cleared​

A significant finding concerned three noticees—Kanchanben Vasantbhai Shingala (No. 17), Vasantbhai H Shingala (HUF) (No. 18), and Pravinkumar Hardasbhai Shingala (P) (No. 19). These entities were found exempt from the violation because their names did not appear in the list of Equity Shares held by Promoters in the Annual Reports for Financial Year 2024, indicating nil shareholding during the examination period.

Similarly, Noticee No. 16, Gopalbhai Hardasbhai Shingala, was cleared entirely. He submitted detailed replies asserting that he had ceased to be a shareholder of Ultracab (India) Limited by transferring his entire holding in January 2021, and thus the alleged violation did not arise against him.

Penalties Imposed on Non-Complying Promoter Entities​

For Noticees No. 1 through 15, 20, SEBI concluded that they had violated Regulation 29(2) read with Regulation 29(3) of the SAST Regulations. The Adjudicating Officer imposed a penalty of ₹5,00,000 on each of these entities, which must be paid severally and jointly within 45 days of receiving the order.

The decision affirmed that statutory obligation mandates compliance regardless of whether any disproportionate gain or loss was quantified. Should payment default occur, SEBI reserves consequential recovery proceedings under Section 28A of the SEBI Act to realize the penalty amount through attachment and sale of properties.