Eicher Motors fined ₹10 lakh by the Securities and Exchange Board of India (SEBI) on June 1 for failing to exercise due diligence in a matter involving the issuance of duplicate shares or new certificates. According to an order issued by the financial market regulator, the company must pay the penalties within 45 days.
The order comes after SEBI received a complaint from Adesh Kaur against Eicher, alleging that 903 shares of the company, held in his name since 1994-1995, were fraudulently transferred to the account of a successful impersonator. to forge his signature and change his address from Sangrur (his original address) to Mumbai, then had duplicate stock certificates issued in the fraudster’s name instead of the 903s.
According to Kaur’s complaint, Eicher and its stock transfer agent (STA) – MCS Limited – effected or processed Sangrur’s Mumbai address change and issuance of duplicate certificates without following SEBI requirements or undertaking adequate due diligence.
In its order, SEBI noted that Kaur had mentioned to Eicher the fraudulent transfer of 903 shares of the company from his folio in 2013, the value of which was approximately ₹17.52 lakh during the relevant period.
Eicher took steps to compensate Kaur by rectifying its membership register and transferred shares of the company to its demat account in May 2021.
It should be noted that the set-off was only made by Eicher after a specific direction was issued by the Supreme Court in July 2018, ordering Eicher to rectify its record with respect to physical stock certificates. .
Although the court instruction was issued in July 2018, Eicher compensated Kaur in 2021, almost after three years.
In doing so, he violated general document handling standards.
“The time limit prescribed by … the Listing Agreement and … the LODR for issuing duplicate shares or new certificates was not met by the (Eicher) notice,” SEBI said.
According to the rules, a listed entity is required to issue new certificates in case of loss or old decrepit or worn certificates within 30 days from the date of filing.
“The investor was put at a loss due to the utter failure on the part of the wise (Eicher) to exercise the level of due diligence and professionalism expected when processing the request for issuance of duplicate certificates by copycats,” SEBI said. .
“By aimlessly shifting responsibility onto his agent for the breaches, the investor’s interest has suffered. Clearly, the adviser failed in his duty to exercise due diligence, skill and promptness in the dealing with Adesh Kaur’s complaint or grievance,” he added. added.
(With PTI inputs)