The consent order passed by the Securities and Exchange Board of India does not ban or bar Reliance Infrastructure (RInfra) and Reliance Natural Resources (RNRL), Anil Ambani or other directors from accessing capital markets, according to the chairman of the Anil Dhirubhai Ambani Group (ADAG).
Addressing journalists here on Sunday to clarify certain issues concerning media reports, Mr. Ambani said the SEBI consent guidelines were introduced in April 2007. “The consent philosophy is in line with regulatory practices in developed markets. In fact, the United States Securities Exchange Commission settled over 90 per cent of cases through consent orders. SEBI has itself passed over 1,000 consent orders in the past four years — more than one per day on average.”
Settlement charge paid
The order was passed on Friday and accordingly, RInfra and RNRL paid a settlement charge of Rs. 25 crore each. “This is not a penalty or a fine,” said Mr. Ambani. “The entire focus of our consent application was to protect the financial flexibility and growth prospects of all our group companies.”
Clarifying that the consent process was “purely voluntary on the part of the applicant companies and individuals,” Mr. Ambani said the applicant was the one who proposed the consent terms — they are not imposed or induced by SEBI.
As per the consent terms, RInfra will not make investments in listed securities in the secondary markets till December 2012, while specified directors, including Mr. Ambani, will not make investments in listed securities in the secondary markets till December 2011. “We do not have plans to buy listed or unlisted companies and have charted an organic growth path. There is no company of the scale or size that we plan to acquire in the power sector. But if we choose to acquire a company, there are no problems and we can do so.”
While the case has been settled for Rs. 50 crore, SEBI has ordered both firms to rotate statutory auditors for three years, a policy which the company has already implemented. However, RInfra can continue to invest in mutual funds, primary issues and unlisted securities. It will also have full flexibility to fund, raise capital and implement growth plans.
“We preserve the growth prospects of the companies fully and maintain full financial flexibility to implement existing and future projects. There is no burden on the companies and no compromise on the interests of investors and stakeholders,” Mr. Ambani said.
