SEBI VS DLF

GROUP 1
BACKGROUND

Restrained from accessing the securities market

prohibited them from dealing in securities for period of 3 years
The Securities and DLF Limited
Exchange Board of (“DLF”) & 5
India (“SEBI”) Acts Violated directors and CFO
1. The SEBI (Prohibition of Fraudulent and Unfair Trade
Practices relating to Securities Market) Regulations,
2003 (“PFUTP Regulations”)
2. The SEBI (Disclosure and Investor Protection)
Guidelines, 2000 ("DIP Guidelines")
3. The SEBI (Issuance of Capital and Disclosure
Requirements) Regulations, 2009 ("ICDR
Regulations").
 SEQUENCE OF EVENTS

Jan 26th Apr 25th May 4th Jun 18th June 9th Apr 20th OCT10th OCT
2007 2007 2007 2007 2007 2010 2011 2014
Registered a first information SEBI ordered an
report (“FIR”) alleging that investigation into the
two of DLF’s wholly owned Mr. Kimsuk Sinha filed allegations levied by Mr.
subsidiaries (“WOS”) were complaints with SEBI Sinha in his complaints
the only shareholders of alleging Sudipti and other Mr. Sinha filed a Writ to ascertain the
the Sudipti and requesting to persons had defrauded him Petition before the violations
disallow the listing of DLF of 34 crore in relation to a Delhi High Court
pursuant to the IPO and for transaction between them (“DHC”) SEBI restrained DLF Limited
immediate action for purchase of land
. its 5 directors and CFO
prohibited them from
DLF had filed a draft
Prospectus was filed dealing in securities for the
RHP (“DRHP”) with
with the Registrar of period of 3 years
SEBI raising Rs. DLF issued the
9187.5 cr through an Companies (“ROC”) .
RHP(red herring
IPO. prospectus)
CHARGES LEVIED BY SEBI
Non disclosure of
material information in
relation to alleged
transactions by DLF in
subsidiaries by DLF in
RHP/Prospectus
• On Nov 29, 2006, the
entire shareholding • No change in the
in Felicite held by WOS of
DLF was sold to 3 who
were wives of key
managerial personnel
• On Nov 30, 2006, WOS of • No change in any of the
DLF sold their entire
shareholding
in Shalika to Felicite.
• On the same date, the 3
WOS of DLF sold their
entire shareholding
in Sudipti to Shalika
Non-disclosure of
related party
RHP/Prospectus
members of board of
Alleged Subsidiaries -
after the aforesaid sale of
shareholding
authorized signatories of
the bank accounts,
registered office and
statutory auditors of
Alleged Subsidiaries -
after the date of claimed
dissociation
Non-disclosure of
outstanding litigation
relating to Alleged
Subsidiaries by DLF in
RHP/Prospectus
• DIP Guidelines required
DLF to disclose
outstanding litigation in
respect of its subsidiaries
or any other litigations
whose outcome could
have a materially adverse
effect on the financial
position of DLF.
• The RHP/Prospectus of
DLF did not provide any
information of the FIR.
Violations of DIP
guidelines by five
directors and CFO of
DLF
• Since the directors and
CFO of DLF had
authorised the
RHP/Prospectus and signed
the declarations certifying
the compliance of DIP
Guidelines, SEBI held that
they have failed to ensure
disclosures to be true and
correct thereby violating
provisions of DIP
guidelines read with ICDR
regulations.
DLF’S ARGUMENTS BEFORE SEBI
CONCLUSION