SEBI Refuses To Lift Market Ban On Gautam Thapar, Others; Gives Certain Relaxations
Gautam Thapar, former chairman of CG Power & Industrial Solutions Ltd. and promoter of Avantha Holdings. (Photographer: Pankaj Nangia/Bloomberg News)

SEBI Refuses To Lift Market Ban On Gautam Thapar, Others; Gives Certain Relaxations

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Regulator Securities and Exchange Board of India on Wednesday refused to lift the capital market ban imposed on fraud-hit CG Power and Industrial Solutions Ltd. ex-Chairman Gautam Thapar and three other former officials in a case related to diversion of funds.

Besides Thapar, the other officials banned are CG Power's former Chief Financial Officer VR Venkatesh and former directors Madhav Acharya and B Hariharan. However, they have been allowed to liquidate up to 25 percent of the value of the securities held by them. The order comes following a directive to the Securities Appellate Tribunal in February which granted SEBI time till March 10 to pass the final order in the matter.

The officials had moved the tribunal following an interim order passed by SEBI in September 2019, which had barred them from the capital markets for "serious" misstatement of accounts as well as diversion of funds. Besides, it had ordered forensic audit of the company.

Also read: Fraud-Hit CG Power Asks Gautam Thapar-Linked Firms To Return Rs 3,300 Crore

In its 174-page confirmatory order on Wednesday, SEBI barred Thapar, Venkatesh, Acharya, and Hariharan from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further orders. These four former officials "shall, however, be permitted to liquidate up to 25 percent of the value of the securities held by them as on the date of the interim order".

The relaxation has been given following a plea by them. Most of the officials in their applications to the regulator explained the hardship they are facing in their personal lives. Further, they have been restrained from being associated with any intermediary registered with SEBI or any listed entity until further orders.

SEBI also said that CG Power will continue to take all necessary steps to recover the amounts due to the company. Avantha Holdings, Acton Global and Solaris Industrial Chemicals have been directed to retain funds/other assets to the extent of receivables shown as outstanding to CG Power.

The regulator conducted an investigation to ascertain whether there were any violations of the provisions of securities laws by the company and its directors or promoters during the period 2016-2019. SEBI prima facie noted that the chairman along with certain directors, employees of CG Power and related entities, had perpetrated irregularities. These include the use of certain assets of the company as collateral, including being co-borrower and/or guarantor, for enabling third parties to obtain loans without due authorisation from the board of CG Power.

Also read: SEBI Proposes New Mechanism To Make E-Voting Convenient For Shareholders

They allegedly routed transactions through subsidiaries, promoter-affiliated companies, and other connected parties for the ultimate benefit of companies related to the promoter group. Further, they allegedly used different accounting heads for concealing payments made by CG Power, facilitated interest-free advances to promoter-affiliated companies and entered into dubious transactions

The regulator, in the interim order, had said the transactions are prima facie "designed to divert/siphon off money from the listed company, which rightfully belongs to its shareholders".

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