Cracking the whip for illegal transfer of shares and dividend money of companies, SEBI banned registrar and transfer agent Sharepro Services and 15 individuals from the securities market.
Sharepro Services (I) Pvt Ltd has been the registrar and shares transfer agent for many top companies, including Britannia, Asian Paints, Tata Communications and Kansai Nerolac.
Besides imposing the ban on Sharepro and the 15 entities, the market watchdog has asked the companies concerned to carry out a “thorough audit” of the records and systems of Sharepro to ascertain whether the dividends have been paid to actual holders and whether securities have been transferred as per the law.
The ruling of the Securities and Exchange Board of India (Sebi) comes after it found that dividends and shares belonging to rightful investors were “transferred to the persons related to the management of Sharepro”.
In his order, Sebi Whole Time Member Rajeev Kumar Agarwal said Sharepro Services and several entities linked with the management of the company have been barred from buying, selling or dealing in the securities market or associating themselves with securities market till further directions.
“Companies who are clients of Sharepro are directed to conduct a thorough audit of the records and systems of Sharepro with respect to dividends paid and transfer of securities to determine dividends have been paid to actual/beneficial holders and whether securities have been transferred as per the provision of the law,” the order said.
The audit would cover the dividends paid/transfers effected within the preceding at least 10 years. The companies have bee asked to complete the audit in three months and report be submitted to the regulator.
Further, Sebi said the companies should take appropriate action within six months.
“Companies who are clients of Sharepro are also advised to carry out/ switchover their activities related to a registrar to an issue and share transfer agent, either in-house or through another registrar to an issue or share transfer agent registered with Sebi,” the market regulator noted.
Passing the order, Agarwal said that since the conduct of Sharepro, its promoters, directors, Vice President and other entities do not prima facie appear to be in the interest of investors and the securities market, “necessary action has to be taken against them immediately, else it may lead to a loss of investors’ trust in the securities market”.
Citing various cases, Sebi said the system/database of Sharepro shows that dividends were paid to original shareholders but verification of the bank accounts revealed that it was “paid to persons who were not the rightful shareholders or were not at all shareholders of the companies”.
Out of the 797 cases looked into by the regulator, in 644 of them, paid date in the back office system of Sharepro was different from the date of issuance of the instrument by the bank.
“Surprisingly, in 13 cases, the system of Sharepro shows that dividend has been transferred to IEPF (Investor Education and Protection Fund) whereas those payments have been actually made to Nagesh Karkera and Satyam Brush Industries,” Sebi said.
The individuals who have been barred from the securities market till further directions include Govind Raj Rao, Bhagyalaxmi Rao, Indira Karkera, Prashant Karkera, Anil Jathan, Raju Langde and Suresh Unavane.
Others are Narayan Devadiga, SwapnilSutar, Shrikant C Bhalakia, Anand S Bhalakia, Balram Mukherjee, Krishna M Ghosh, Sukhdev Bhosale and Nagesh N Karkera.