The Securities and Exchange Board of India (Sebi) on Monday directed Linde India to comply with the norms of materiality thresholds for future related party transactions (RPTs) based on the aggregate value of transactions, amid an ongoing investigation by the regulator.
The market regulator’s probe follows complaints by shareholders that the company did not seek their approval before executing material RPTs. Sebi said that the company did not make any valuation available to the board when the decision to award future businesses to a related party was made.
“Such actions effectively deprive public shareholders of an opportunity to express their views on transactions which have the potential to disproportionately benefit controlling shareholders at the expense of the broader shareholder base,” said Ashwani Bhatia, whole-time member, Sebi in the order.
Sebi will be considering punitive measures once the ongoing investigation reaches its conclusion. The regulator has issued summons to key personnel and independent directors of the firm. However, Linde and its independent directors have moved the Bombay High Court against the summons and investigation initiated by Sebi.
No stay has been granted in the matter.