SEBI Imposes Penalty on Shubhlaxmi Jewel Art Limited Promoter Group for Alleged Violation of Takeover Regulations

SEBI Imposes Penalty on Shubhlaxmi Jewel Art Limited Promoter Group for Alleged Violation of Takeover Regulations​

The Securities and Exchange Board of India (SEBI) has finalized an adjudication order, finding that the promoter group of Shubhlaxmi Jewel Art Limited violated the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations). Consequently, the Adjudicating Officer (AO) has imposed a monetary penalty on the promoter and associated persons.

The inquiry centered on the compliance of the promoter group with the SAST Regulations following the allotment of 18,00,000 equity shares to Noticee 1, Narendrasinh J Chauhan, and the subsequent increase in the promoter/promoter group's shareholding.

Allegations and Findings​

The core allegation related to the acquisition of shares. According to the proceedings, the shareholding pattern of Shubhlaxmi Jewel Art Limited showed that the promoter group increased its holding by 5.82% following the conversion of warrants into equity shares. The SEBI's concerns, as detailed in the notice, were that since the promoter/PACs acquired shares increasing their holding by more than 5% within a financial year, an open offer, as mandated by Regulation 3(2) of SAST Regulations, was required.

The promoter group responded that the acquisition was part of a preferential allotment meant to rescue the company from financial distress. They argued that this action did not change control and that the preferential allotment benefited public shareholders, stating that the current equity share price of Rs. 28 was double the warrant issue price of Rs. 14.

However, the Adjudicating Officer concluded that the alleged violation of Regulation 3(2) of the SAST Regulations by the Noticees, who are deemed Persons Acting in Concert (PACs), was established based on the shares acquired.

Penalty Imposed​

The AO found that the Noticees were liable for a penalty under Section 15H of the SEBI Act. While acknowledging factors like lack of quantifiable disproportionate gain or material loss to investors on record, the AO determined that a penalty must be imposed to prevent future violations.

The penalty of Rs. 10,00,000/- (Ten Lakh Only) was jointly and severally imposed on each of the eight named Noticees for the violation of Regulation 3(2) of SAST Regulations.

The Noticees and their penalty details are as follows:


In total, the penalty is Rs. 10,00,000/- to be paid jointly and severally by each of the eight Noticees.

SHUBHLAXMI Stock Price Movement​

Shubhlaxmi Jewel Art Limited shares slipped by 0.25% on Friday, settling at ₹20.15. The decline represented a loss of ₹0.05, marking a slight dip as the stock closed for the week.