The fund to undertake the transaction was allegedly provided to TUL through UPL's wholly owned Mauritius-based subsidiary company Bio-Win Corporation Ltd
Agrochemical company UPL (formerly United Phosphorus Ltd) and its promoter and Chairperson Jaidev Rajnikant Shroff have settled a case related to an alleged violation of regulatory norms with capital markets regulator Sebi after paying Rs 20.2 crore towards settlement charges.
The settlement order came after the applicants -- UPL and Jaidev Rajnikant Shroff -- proposed to settle the instant proceeding through a settlement order "without admitting or denying the findings of fact and conclusions of law".
"In terms of the settlement regulations, it is hereby ordered that the instant proceeding initiated against the applicants, vide show cause notice dated February 28, 2024, is disposed of," Sebi's Chief General Manager Anitha Anoop said in the order on October 30.
Pursuant to receipt of an emailed query from a media outlet, Sebi undertook a suo-moto investigation in the affairs of certain companies, including UPL (Applicant No. 1) and its promoters to ascertain whether there was any routing of funds to Indian securities market by UPL and/or its promoter Jaidev Rajnikant Shroff (Applicant No 2) using overseas bank accounts with UBS AG Bank in violation of provisions Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules.
The period of investigation was from January 2006 to March 2008.
Thereafter, a common showcause notice was issued to the applicants by the Securities and Exchange Board of India (Sebi) on February 28, 2024, for the alleged violations of the market norms and for misrepresenting the truth and concealment of a material fact known to them with respect to the shareholding in its annual reports.
In its notice, the regulator also alleged that UPL, assisted by Shroff, had used Sebi-registered FII -- Matterhorn Advisory Singapore Pte Ltd sub-account Matterhorn Ventures to indirectly trade in its own scrips listed in India.
This financial route (FII route) was alleged to be opted by opening overseas account with UBS in the name of an entity Tulippe Universal Ltd (TUL) wherein Shroff was a beneficial owner and exercised control over the transactions in the UBS account.
The fund to undertake the transaction was allegedly provided to TUL through UPL's wholly owned Mauritius-based subsidiary company Bio-Win Corporation Ltd, thereby concealing the true source of funds invested in the Indian securities market, the regulator said.
By indulging in the arrangement/scheme, it was alleged that UPL, assisted by Jaidev Rajnikant Shroff, made wrongful gains of about Rs 4.2 crore computed on a notional basis, it added.
Pursuant to the receipt of the settlement applications, UPL and Shroff filed revised settlement terms, wherein they proposed to pay Rs 20.22 crore being the settlement amount, along with the disgorgement amount with 12 per cent interest.
The revised terms proposed by the applicants were approved by the Sebi's high-powered advisory committee that recommended that the matter be settled.
After remitting the settlement fee of Rs 20.22 crore, UPL and Jaidev Rajnikant Shroff settled the case with Sebi.