Adjudication Order in respect of Dakshin Mercantile Private Limited in the matter of LKP Finance Limited

This adjudication order concerns Dakshin Mercantile Private Limited (DMPL) and its acquisition of shares in LKP Finance Limited. SEBI investigated DMPL for potential violations of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The investigation focused on whether DMPL completed the share acquisition as per the Share Purchase Agreement and SEBI's timelines, specifically concerning Regulation 22(3).

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. Order/VV/NK/2020-21/9247]

UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 1995;

In respect of
Dakshin Mercantile Private Limited (PAN: AAECD7918B)
In the matter of LKP Finance Limited

FACTS OF THE CASE IN BRIEF

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) based on an investor complaint, conducted an examination into the acquisition of shares of LKP Finance Limited (hereinafter referred to as ‘Company/ LKP’) by Dakshin Mercantile Private Limited (hereinafter referred to as ‘Noticee/DMPL’) to ascertain the violation, if any, of the provisions of Securities and Exchange Board of India, Act 1992 (hereinafter referred to as the ‘SEBI Act’) and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as “SEBI (SAST) Regulations, 2011”) by Dakshin Mercantile Private Limited (Noticee).

2. SEBI examination in the matter observed that DMPL has made an open offer for acquisition of up to 32,67,842 equity shares of Rs.10/- each, representing 26% of the fully diluted voting equity share capital of LKP Finance Limited (Target Company) at a price of Rs. 198/- per equity share pursuant to execution of a Share Purchase Agreement (SPA) dated May 14, 2018 entered into by and between M.V. Doshi, M.V. Doshi (through partnership firm M/s L.K. Panday), Pratik M. Doshi, Ira P. Doshi, Shital A. Sonpal, Samaya P. Doshi, Sea Glimpse Investments Private Limited and Bhavana Holdings Private Limited (collectively referred to as the “Sellers”), the Acquirer (Noticee) and the Target Company to acquire a minimum of 69,82,434 Equity Shares representing 55.55% of the fully paid-up equity share capital of the Target Company and upto a maximum of 77,92,546 Equity Shares representing 62.00% of fully paid-up equity share capital of the Target Company, depending upon the Equity Shares validly tendered and accepted in the Offer.

3. Further it was observed that 30,74,510 shares (24.46%) were tendered in the open offer and the payments were made to the eligible shareholders on November 13, 2018 along with applicable interest. It was alleged that the Noticee did not complete the acquisition of shares of LKP as per the SPA and in accordance with the timelines prescribed by SEBI and that the same was in violation of the provisions of Regulation 22(3) of the SEBI (SAST) Regulations, 2011. SEBI, therefore, initiated adjudication proceedings under the SEBI Act, 1992 against the Noticee to inquire into and adjudge the alleged violation of the provisions of Regulation 22(3) of SEBI (SAST) Regulations, 2011.

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