SEBI Passes Settlement Order in Cummins Inc: Pays Rs. 91.22 Lakhs As Settlement Charges

SEBI Passes Settlement Order in Cummins Inc: Pays Rs. 91.22 Lakhs As Settlement Charges

The Securities Exchange Board of India (SEBI) passed a settlement order in respect of Cummins Inc, in the matter of Automotive Axles Ltd.

The case relates to Cummins indirectly acquiring a 35.52 per cent share in Automotive Axles Ltd. (AAL).

The Cummins Inc., had filed a suo motu settlement application in terms of SEBI (Settlement Proceedings) Regulations, 2018 (“Settlement Regulations”) proposing to settle by neither admitting nor denying the guilt, the enforcement proceedings that may be initiated against it, for the violation of Regulation 13(2)(e) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations, 2011”).

The background of the case is that the applicant had indirectly acquired 35.52% shares of Automotive Axles Ltd. (“Target Company”). As per the details provided in the Draft Letter of Offer (‘DLOF’) submitted by the Target Company to SEBI, the primary acquisition was contracted on 21st February, 2022 which triggered the requirement of public announcement (‘PA’) of making of an open offer under Regulations 3(1), 4 and 5(1) of the SAST Regulations, 2011.

Since the acquisition was contracted on 21st February, 2022, the applicant was required to make the PA in terms of Regulation 13(2)(e) of the SAST Regulations, 2011 by 25 February, 2022.

However, the PA was made belatedly on 10 October, 2022 i.e., with a delay of 227 days. In view of the same, the applicant was found to have violated the provisions of Regulation 13(2)(e) of the SAST Regulations, 2011.

Pursuant to the receipt of the application, the authorized representatives of the Applicant had a meeting with the Internal Committee of SEBI on 2 February, 2023 wherein the aspect of the delayed Public Announcement in the making of the Open Offer and the implications thereof along with the terms of the settlement were deliberated. Thereafter, the Applicant proposed revised settlement terms dated 9 February, 2023 to settle any enforcement proceedings that may be initiated against it.

The application was placed before the High-Powered Advisory Committee (“HPAC”) in its meeting held on 22 February, 2023, which considered the facts of the case and the revised settlement terms proposed by the Applicant and recommended the case for settlement upon payment of ₹91,22,894. The recommendation of the HPAC was accepted by the Panel of Whole Time Members of SEBI on 10 March, 2023 and the Notice of Demand was issued to the Applicant vide email dated 16 March, 2023. The Applicant informed about the remittance of the aforesaid settlement amount on 5 April, 2023 and SEBI has confirmed credit of the same.

Therefore, the SEBI in exercise of the powers conferred under Section 15JB read with Section 19 of the Securities and Exchange Board of India Act, 1992 and in terms of Regulations 23 read with Regulation 28 of the Settlement Regulations, passed the settlement order thereby disposing the proceedings initiated against Cummins Inc.