Five Individuals Settle Regulatory Violation Case with SEBI; Pay Rs 95.55 Lakh

As many as five current and former officials of Add-Shop E-Retail Ltd (ASERL) and White Organic Agro Ltd (WOAL) on Thursday settled a case with Sebi pertaining violation of regulatory norms and made a payment of Rs 95.55 lakh towards the settlement amount.

ASERL is into the business of manufacturing, marketing and distribution of Ayurveda products and WOAL is engaged in the business of organic food items.

The case was settled by Dadhania Vivek Gopalbhai, audit committee member of ASERL; Nirajkumar K Malaviya, company secretary and compliance officer of ASER;Jigna V Thakkar, audit committee member of WOAL; Dharmesh Bhanushali, audit committee chairman of WOAL; and Chandresh Regulations, former audit committee chairman of WOAL, each contributed to the settlement amount, Sebi said in its order.

Of the total payment, Malaviya paid Rs 40.95 lakh, while the other four remitted Rs 13.65 lakh each.

This settlement followed an application from the entities requesting Securities and Exchange Board of India (SebI) to resolve the alleged violations "without admitting or denying the findings of fact and conclusions of law" under settlement regulations.

Acknowledging the settlement, the regulator in its order on Thursday said, "In view of the acceptance of the settlement terms and receipt of... settlement amounts by Sebi, the specified proceedings initiated against the applicants vide interim order cum show cause notice dated May 6, 2024 are disposed of".

The case pertains to alleged violation of regulatory norms.

The regulator examination began after receiving complaints during December 2021 and September 2023 against Add-Shop E-Retail Ltd and White Organic Agro Ltd alleging irregularities with respect to related-party transactions, fake announcements regarding supply orders etc.

The investigation was conducted for the period between April 2020 to March 2023, to ascertain possible violations of provisions of Sebi Act, PFUTP (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, and LODR (Listing Obligations and Disclosure Requirements) Regulations.

After conclusion of investigation, an interim order-cum-show cause notice was issued to various entities, including the five applicants wherein it was alleged that ASERL and WOAL misrepresented/ mis-stated their financial statements for the Financial Years (FYs) 2020-21, 2021-22 and 2022-23 through fictitious transactions.

Also, it was alleged that ASERL falsified details of attendance of independent directors in audit committee meetings and board meetings for FYs 2020-21, 2021-22 and 2022-23.