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CS Executive · Capital Market and Securities Laws · Acquisition of Shares and Takeovers - Concepts

Arjun acquires a stake in a listed company without first disclosing the aggregate of his existing shareholding in that company, although the regulations require such disclosure. What is the consequence under the SEBI Act, 1992?

Arjun is liable to a penalty under Section 15H of the SEBI Act, which covers failure to disclose the aggregate shareholding in a body corporate before acquiring its shares when so required. Section 12(3) concerns registration of intermediaries and does not apply.

  1. AHe is liable to a penalty under Section 15HCorrect
  2. BHe is liable only to cancellation of a certificate of registration under Section 12(3)
  3. CHe faces no consequence because disclosure is only voluntary
  4. DHe is liable only if the company is a private company

Explanation

Clause (i) of Section 15H penalises failure to disclose the aggregate of shareholding in the body corporate before acquiring any of its shares, where such disclosure is required under the Act, rules or regulations. Section 12(3) relates to suspension or cancellation of registration of intermediaries, which is not the consequence here. Disclosure is mandatory when required.

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