Sebi asks Kaycee Industries' promoters to partially sell stake

MUMBAI: Sebi today directed two promoter entities of Kaycee Industries to partially sell their stake within three months and deposit the proceeds with the investor protection fund, for violating takeover norms.

Securities and Exchange Board of India (Sebi) found that CMS Computers Ltd and CMS Traffic Systems had acquired shares of Kaycee Industries through preferential allotment that had hiked their collective stake in the company by 5.23 per cent to 72.04 per cent, back in July 2013.

As the acquisition had exceeded the permissible 5 per cent creeping limit, the promoters were obligated to make a public announcement to the shareholders of the company, which they failed to do.

"I find that the noticees have collectively acquired 10,000 (5.23 per cent equity shares) of the target company in breach of the provisions...," Sebi's whole time member Rajeev Kumar Agarwal said in an order today.

"I am of the view that the direction to the acquirer to sell 146 shares (0.23 per cent) of the target company in small lots on the concerned stock exchange and transfer of the entire proceeds of such sale of shares to the Investor Protection and Education Fund... would be commensurate with the breach as found in this case," Agarwal noted.

Accordingly, the promoters have been asked to "jointly and severally, disinvest 146 shares of Kaycee Industries Ltd through sale to parties not connected/related to them in small lots in tranches on the BSE ensuring that such sale does not disturb the market equilibrium".

Further, they would have to transfer the entire proceeds of such sale of shares to the 'Investor Protection and Education Fund'.

"The Noticees shall complete the sale of shares as directed above within 3 months from the date of this order and file a report to Sebi detailing the compliance of the... directions within two weeks from the date of such compliance," the order said.