Coffee Day Enterprises, which owns and operates the Cafe Coffee Day chain, on Thursday settled with Sebi a case related to alleged disclosure lapses, after paying Rs 69.06 lakh towards the settlement amount.
The order comes after the company approached Sebi to settle the matter, pertaining to alleged violations of LODR (Listing Obligations and Disclosure Requirements) norms under the settlement mechanism.
"It is hereby ordered that pending adjudication proceedings initiated against Coffee Day Enterprises Ltd under the SCN (show cause notice) dated January 21, 2021, are hereby disposed of," Sebi said in a settlement order.
The regulator had initiated adjudication proceedings against Coffee Day Enterprises for the alleged violations of LODR Regulations, and a show cause notice was issued to the company in January 2021 in this regard.
It was alleged in the show cause notice that no limited review report was placed before the company's board of directors at its meetings in November 13, 2019, and January 29, 2020, wherein the financial results for the quarters ending June 30, 2019, and September 30, 2019, were approved, respectively.
The company submitted unaudited financial results for the quarters ended June 2019 and September 2019, but the same were allegedly not subject to limited review by its statutory auditors.
In addition, it was alleged that the company exceeded the 24-hour timeline for disseminating the information to the stock exchanges about the resignation of Sanjay Nayar as its non-executive director.
Further, there was an alleged delay of two days in making the disclosure regarding default on the payment of interest or repayment of principal amounts on loans for the quarter ended December 2019.
In January 2020, the company had disclosed to the stock exchanges that they entered into an agreement to sell Way2Wealth Securities, including its certain subsidiaries to Shriram Ownership Trust, subject to the closing conditions and required statutory approvals.
However, the details of the sale of Way2Wealth were allegedly not disclosed by the company.
On enquiry, it was found that the company uploaded the details of the sale of Way2Wealth to the stock exchanges on August 31, 2020, and the same was not uploaded earlier as the firm was about to intimate after getting final approvals from the statutory regulators and completion of the sale process, Sebi noted.
Besides, the company allegedly did not disclose the auditor's resignation letter to the stock exchanges. The auditor's resignation letter contained detailed reasons for resignation which were required to be disclosed.
Through such acts, the company has allegedly violated the provisions of LODR norms, the Securities and Exchange Board of India (Sebi) noted.
Subsequent to the issuance of the SCN, the regulator received an application from the company in February for the settlement of the case.
Pursuant to this, Sebi's high-powered advisory committee recommended settling the case. The recommendation was approved by a panel of the whole-time members of Sebi.
Thereafter, Coffee Day Enterprises made a payment of Rs 69.06 lakh towards the settlement amount as per the settlement terms approved by the panel of whole-time members and accordingly, the regulator settled the case.
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