Interim order against HFCL & its directors revoked by Sebi today

Markets regulator Sebi today revoked its interim order against Haryana Financial Corporation Ltd (HFCL) and its directors in a matter related to non-compliance of minimum public shareholding norms. The public shareholding in HFCL -- a listed public sector company as on August 9, 2010, was less than 10 percent. As per the Securities Contracts (Regulation) Rules, HFCL had time till August 8, 2013, to increase it to at least 10 percent. The Securities and Exchange Board of India (Sebi) passed an interim order dated October 14, 2013, against HFCL for failing to ensure compliance with minimum public shareholding norms within the due date.

"The interim order was passed without prejudice to the right of Sebi to take any other action against HFCL and its directors in accordance with law," the regulator said in a fresh order. As per amendments to the Securities Contracts (Regulation) Rules on August 22, 2014, now a listed public sector company has time till August 21, 2018, to increase its public shareholding to at least 25 percent. Also, the earlier requirement of at least 10 percent is no longer stipulated. "Therefore, as on date, HFCL is not in violation of minimum public shareholding norms...," Sebi said.

Accordingly, the regulator has revoked the directions issued through the interim order against HFCL and its directors with "immediate effect". Sebi also noted that HFCL failed to ensure compliance with minimum public shareholding norms before amendments to the Securities Contracts (Regulation) Rules for the period from August 9, 2013, to August 21, 2014. "I do not find any justifiable reason for HFCL to have delayed compliance with the requirement to maintain minimum public shareholding," Sebi said, adding that it "may consider initiating any action as deemed fit".