MUMBAI : Brightcom Group Ltd has filed a fresh application before the Securities Appellate Tribunal seeking a stay on the market regulator’s order restraining ace investor Shankar Sharma and others from selling shares in the digital marketing company.
The Securities and Exchange Board of India had in August restrained Brightcom’s then chairman and managing director Suresh Kumar Reddy and chief financial officer Narayan Raju from holding directorial positions following an investigation into alleged irregularities in preferential allotment of shares.
Brightcom in its petition said the allegations made in Sebi’s order were “baseless and completely unfounded”. The company added that its turnover was expected to substantially deteriorate in the September and December quarters as a result of Sebi’s actions.
“Because of the ouster of Mr Reddy (former chairman and managing director), the company has been subjected to serious problems including the problem of its very existence,” the company said in its 187-page application to SAT. Mint has seen a copy of the petition.
SAT will hear the matter on 2 January, said a counsel aware of the developments.
Brightcom Group had first approached the appeals court on 11 December challenging the market regulator’s order. Justice Tarun Agarwala, presiding officer of SAT, refused to grant interim relief to the company after hearing an appeal earlier last week.
“We have been informed that the appellants filed an application for settlement which is pending consideration. In view of the aforesaid, we are not inclined to consider the stay application at this state,” the order said last week.
The tribunal also asked Sebi to file its reply within three weeks and posted this matter for final disposal on 9 February.
The market regulator had received complaints on 6 October 2022 and on 12 May regarding preferential allotments made by Brightcom Group in the financial years 2019-20 and 2020-21.
The complaints alleged that the company had raised money through preferential issue of shares to entities that were directly or indirectly connected to it and that the money was given as loans and advances to its subsidiaries.
They also alleged that the company did not issue proper disclosures in its annual report regarding utilisation of the proceeds of these preferential issues.
Based on Sebi’s investigation, whole-time member Ashwani Bhatia in his order restrained Reddy and Raju from holding directorial positions until further notice.
A total of 25 entities and individuals were hit by Sebi’s order.
“It is due to Sebi’s August order, the company does not have any executive director/whole-time director, and on account of such vacancy the public shareholders are suffering,” said another senior counsel involved in the matter.
Brightcom Group shares are down by nearly 34% this year, and ended trading on Tuesday on NSE at ₹19.35 apiece, down 2.5%.
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Published: 26 Dec 2023, 06:49 PM IST