India's richest man Mukesh Ambani, who is the chairman of Reliance Industries, was on Wednesday imposed with a fine to the tune of Rs 25 crore by India's market regulator under the grounds of irregularities. The fine has also been slapped on Ambani's family members and some entities linked to them. The development has come a day after Forbes magazine had declared Ambani as Asia's richest man.
According to Reuters, the Securities and Exchange Board of India (SEBI) has imposed a total penalty of Rs 25 crore on Mukesh Ambani, Anil Ambani, other individuals, and entities for not making regulatory disclosures when they collectively raised their shareholding in Reliance by nearly 7% by subscribing to the January 2000 issue. The members of the Ambanis family to face the penalty include Nita Ambani, wife of Mukesh Ambani, and Tina Ambani, wife of Anil Ambani.
In its 85-page order, SEBI said that the promoters of Reliance Industries Limited (RIL) and Persons Acting in Concert (PAC) had failed to disclose the acquisition of more than a 5 percent stake in the company in 2000. The market regulator further said, " Ambani and others, by their failure to make a public announcement, deprived the shareholders of their statutory rights/opportunity to exit from the company".
As per the order, 6.83% shares that were acquired by RIL promoters together with PAC's consequent to exercise of an option on warrants attached with non-convertible secured redeemable debentures were in excess of the ceiling of 5 percent prescribed under the takeover regulations.
The acquirement of shares has warranted the obligation of making a public announcement on January 7, 2000. However, SEBI has found that the promoters and PACs have not made any public announcement for acquiring the shares.
As they haven't made any public announcement for acquiring shares, it has been alleged that they have violated the provisions of the takeover regulations due to which India's market regulator has now imposed a fine to the tune of Rs 25 crore ($3.36 million) on the Ambanis and their families.
It must be noted that the issue has happened in 2000 before the split between Mukesh and Anil Ambani. In 2005, they had split the business empire built by their father Dhirubhai Ambani. Amid being imposed with a fine, Reliance Industries Limited is yet to issue its response.