Markets watchdog Sebi has disposed of adjudication proceedings without imposing any penalty on Reliance Industries in a matter related to alleged incorrect disclosure of diluted earnings per share in its financial results more than 13 years ago.

Sebi decided not to impose any penalty for the alleged violations mainly on two grounds — the amendment to the relevant law that made incorrect disclosure of information by a listed company punishable came into force prospectively from March 2019.

The regulator also mentioned about its pending appeal before the Supreme Court against a Securities Appellate Tribunal (SAT) order.

The quarterly financial statements submitted by Reliance Industries to the NSE for six consecutive quarters beginning June 2007 to September 2008 contained the same figures for basic as well as diluted earnings per share (EPS) despite the existence of share warrants.

RIL had issued 12 crore warrants to its promoters on April 12, 2007 which were convertible within 18 months with an exercise price of Rs 1,402 per warrant entitling its holders to subscribe to equivalent number of equity shares.

On October 3, 2008, the company’s board of directors allotted 12 crore equity shares of Rs 10 each to the allottees, upon exercise of warrants.

SCRA refers to Securities Contracts (Regulation) Act.

The SAT order, passed in May this year, had ruled that failure to comply with the listing agreement under clause 36 attracts penalty under Section 23A(a) of SCRA and not under Section 23E of the Act.

Sebi has filed an appeal in the matter before the Supreme Court but no stay has been granted by the court.

Sebi’s adjudicating officer Biju said “no penalty is warranted in terms of the said provisions in the present adjudication proceedings.” Hence, the present adjudication proceedings are disposed of without imposition of penalty”.