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Raymond gets Sebi show cause for market violations

The Securities and Exchange Board of India (Sebi) has issued a show-cause notice to textile maker Raymond alleging multiple securities market violations. The allegations include failure to obtain necessary approvals for related party transactions in the JK House episode, corporate governance violation for non-disclosure of material information about litigations and non-compliance of shareholder reclassification norms.

Sebi says Raymond did not take necessary approvals for the related party transaction involving lease of JK House to some of the promoters for a decade between 2007 and 2017. Raymond had leased four duplex flats in JK House to an entity named Pashmina in 2003.Pashmina subleased the flats to tenants all of whom were part of the promoter group of Raymond.

Sebi rules mandate each company to decide the quantitative threshold for determining whether a transaction is a material development or not. Raymond had decided that any litigation that amounts to five per cent of the gross turnover of the company or 20 per cent of its net worth would be categorised as material development and needed to be disclosed to the shareholders. The lack of disclosure of the matter despite falling into its definition of a material development was a violation of the listing agreement.