UPL and Jaidev Shroff Settle Regulatory Case with Sebi for Rs 20.2 Crore

UPL, an agrochemical firm previously known as United Phosphorus Ltd, along with its promoter and Chairperson Jaidev Rajnikant Shroff, has resolved a regulatory issue with the Securities and Exchange Board of India (Sebi). They paid Rs 20.2 crore in settlement charges. The settlement was reached without admitting or denying any findings or conclusions.

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The case involved alleged violations of market norms, including misrepresentation and concealment of material facts in UPL's annual reports. Sebi's investigation was triggered by a media query and focused on whether UPL and Shroff routed funds to the Indian securities market through overseas bank accounts at UBS AG Bank, breaching Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules.

Settlement Details and Allegations

The investigation covered the period from January 2006 to March 2008. A show cause notice was issued to UPL and Shroff on February 28, 2024. It alleged that UPL, with Shroff's assistance, used a Sebi-registered Foreign Institutional Investor (FII), Matterhorn Advisory Singapore Pte Ltd, to trade indirectly in its own shares listed in India.

The financial route involved opening an overseas account with UBS under Tulippe Universal Ltd (TUL), where Shroff was a beneficial owner. Funds for these transactions were allegedly provided by UPL's Mauritius-based subsidiary, Bio-Win Corporation Ltd, concealing the true source of investment in the Indian market.

Resolution Process

UPL and Shroff proposed revised settlement terms, offering to pay Rs 20.22 crore as the settlement amount. This included the disgorgement amount with 12% interest. Sebi's high-powered advisory committee approved these terms, recommending the matter be settled.

After paying the settlement fee of Rs 20.22 crore, UPL and Jaidev Rajnikant Shroff concluded their case with Sebi. The settlement order was issued by Sebi's Chief General Manager Anitha Anoop on October 30, disposing of the proceedings initiated against them.

The allegations suggested that UPL and Shroff made wrongful gains of approximately Rs 4.2 crore through this scheme. These gains were calculated on a notional basis according to Sebi's findings.

This resolution marks the end of a significant regulatory challenge for UPL and its promoter. It highlights the importance of compliance with market norms to avoid legal complications.