SEBI Slaps ₹10 Lakh Fine on Madhav Copper for Failing to Disclose Critical GST Search and Regulatory Events

SEBI Slaps ₹10 Lakh Fine on Madhav Copper for Failing to Disclose Critical GST Search and Regulatory Events​

The Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹10,00,000 on Madhav Copper Limited following an Adjudication Order concerning serious breaches of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR). The company faced action for delayed non-disclosure regarding GST proceedings, provisional attachment of assets, and failure to report the cancellation of its GST registration.

The penalty underscores SEBI’s zero tolerance toward material event reporting failures by listed entities. The decision was reached after reviewing submissions from Madhav Copper Limited (PAN: AAICM2859A), which included acknowledgments of unintentional delays in disclosure.

Scope of Violations Under LODR Regulations​

SEBI found that Madhav Copper Limited violated multiple provisions of the LODR Regulations, particularly those concerning the disclosure of material events as set out in Schedule III, Part A. The key allegations centered on five specific non-disclosures.

These violations included the delayed disclosure of a search conducted by GST authorities on July 07, 2021. Furthermore, the company failed to disclose the provisional attachment of its land, building, machinery, inventory, and bank accounts by the GST department.

The Adjudicating Officer noted that Madhav Copper Limited also violated regulations pertaining to the failure to provide an adequate explanation for the disclosure delay. Another critical lapse was the non-disclosure of action initiated under sections 69 and 83 of the CGST/GGST Act, 2017 by GST authorities.

Failure to Disclose Cancellation and Subsequent Restoration​

A significant part of the case involved the cancellation and subsequent restoration of Madhav Copper Limited’s GST registration. The company failed to disclose the initial cancellation of its GST registration when it occurred.

The eventual disclosure was made on April 26, 2023, informing stakeholders that the GST registration had been revoked by the Deputy Commissioner of Sales Tax in response to an order dated April 25, 2023. The Board concluded that this initial omission constituted a violation under Clause 12 of Part A of Schedule III of LODR Regulations.

SEBI’s Findings on Materiality and Reporting Delays​

Madhav Copper Limited argued that the GST search was provisional and ongoing verification processes caused delays. However, SEBI determined that the regulatory action itself met the materiality threshold defined by the company's own internal policy.

The findings showed that the alleged evasion of Rs 137 crore, as reported by CRISIL, significantly exceeded the financial thresholds set in Madhav Copper Limited’s material events disclosure policy. Furthermore, it was established that the omission was likely to result in a significant market reaction if it came to light later.

The regulatory body also noted a clear decline in the equity shares of the Noticee between the date of the GST search (July 07, 2021) and the date of disclosure (July 22, 2021). This demonstrated that the event held significant market impact upon disclosure.

Penalty Imposed for Disclosure Deficiencies​

Based on the established violations, SEBI concluded that it was a fit case for imposing a monetary penalty under Section 15A(b) of the SEBI Act, 1992. The Adjudicating Officer imposed a penalty of ₹10,00,000 (Rupees Ten Lakhs Only).

The order stipulates that Madhav Copper Limited must remit or pay this amount within 45 days of receiving the order through the designated payment facilities on SEBI’s website. Failure to comply could lead to consequential actions by SEBI, including recovery proceedings under Section 28A of the SEBI Act.