Megastar Foods pays Rs 20.15 lakh to settle disclosure norms violation case with Sebi

New Delhi, Jan 4 (PTI) Megastar Foods has settled with capital markets regulator Sebi a case pertaining to the alleged violation of disclosure norms after paying Rs 20.15 lakh towards settlement charges.
     The order came after the applicant, Megastar Foods, proposed to settle the proceedings initiated against it, without "admitting or denying the facts and conclusions of law".
     "In view of the acceptance of the settlement terms... the adjudication proceedings initiated against applicant, vide SCN dated May 13, 2024 is disposed of in terms of the settlement regulations," Sebi's adjudicating officer Amit Kapoor said in the order on January 2.
     The order came after the Securities and Exchange Board of India (Sebi) initiated adjudication proceedings against Megastar Foods, a listed entity, for alleged violation of LODR (Listing Obligation and Disclosure Requirements) regulations.
     Thereafter, a show cause notice (SCN) was issued by the markets watchdog Sebi to the applicant on May 13, 2024.
     The SCN alleged that the applicant failed to secure prior shareholder approval for related party transactions (RPTs) with Ganesh Flour Mills, flouting LODR rules. The audit committee initially approved a Rs 15-crore transaction on May 30, 2023, later revising the limit to Rs 25 crore on November 11, 2022.
     However, the shareholder approval was obtained post facto via postal ballot on July 7, 2023, following its mention in the company's FY23 annual secretarial report.
     Sebi also alleged that the company's RPT policy was devoid of prior approval of shareholders for material RPTs rather it provided for ex-post facto approvals, was not updated to comply with rules mandating prior shareholder consent effective April 1, 2022 and failure on the part of applicant to update its RPT policy.
     Pursuant to the receipt of the application, Megastar Foods filed revised settlement terms and remitted the settlement amount of Rs 20.15 lakh, which was confirmed by Sebi and settled the matter.

(This story has not been edited by THE WEEK and is auto-generated from PTI)