Mumbai: Sebi has slapped a penalty of Rs 5 lakh on an executive of diversified group ITC Ltd for failing to make disclosures about her shareholding after selling over Rs 35 lakh worth shares of the company last year.
The Securities and Exchange Board of India (Sebi) said in an order that it is imposing "a penalty of Rs 5 lakh on the noticee viz, Chandana Ghosh" for failing to make disclosures to ITC and the relevant bourses as mandated under the norms. According to Sebi rules, an officer of a listed company has to disclose to that company and the stock exchanges if the change in their shareholding has exceeded Rs 5 lakh in value or 25,000 shares or 1 per cent of the total shareholding. Sebi found that Ghosh, head-human resource and competency development with ITC, had offloaded 10,000 shares of ITC amounting to Rs 35,27,078 on July 11, 2013 but had failed to make the disclosures on the same.
"The noticee (Ghosh) being a 'officer' of the company was under an obligation to disclose the change in shareholding that exceeded the value of Rs 5,00,000 to the company and the stock exchange, as required under...the PIT (Prohibition of Insider Trading) Regulations," Sebi said. ITC could not be immediately reached for comments. The regulator had carried out an investigation into the alleged irregularity in the scrip of ITC and came across the violations by Ghosh. Ghosh had submitted to Sebi that she was under the "bonafide belief" that she was not an 'officer' of the company and was not required to make any such disclosures.
Going by rules under the Companies Act, Sebi said that Ghosh is an officer as she "is clearly holding a higher position capable of giving directions to her subordinates". As per the Companies Act norms, an officer includes any director, manager or secretary or any person in accordance with whose instructions the board of directors or any one or more of the directors is or are accustomed to act. "The noticee holds the position of the head of the 'Competency Development and Human Resource' function of the 'Trade Marketing and Distribution' vertical of the Indian Tobacco Division' of ITC Ltd," Sebi said.
