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After NHAI, Sebi pulls up UP Power Corporation for disclosure lapses

After NHAI, Sebi pulls up UP Power Corporation for disclosure lapsesMUMBAI: Market regulator the Securities and Exchange Board of India(Sebi) has fined Uttar PradeshPowerCorporation fordisclosure lapses. The order comes after market regulator probed the company for several violations including delay in filing half-yearly results and not providing prior intimation to stock exchanges about the board meeting.UP Power Corporationhas debt securities listed on stock exchanges.

This is the second government department to be pulled up for disclosure lapses. Earlier this year, Sebi had fined National Highway Authority of India (NHAI) for similar lapses.

In a show cause notice sent to UP Power Corporation in July 2020, the regulator accused UP Power Corporation of violating the listing norms in as many as 18 different instances. However, in the order Sebi’s adjudication officer gave ‘benefit of doubt’ to the state government owned entity in several counts. But on the count of disclosure lapses, the corporation was found guilty and a fine of Rs 2 lakh was imposed.

“I note that timely disclosure of relevant information by listed companies is essential for maintaining transparency about the affairs of the Company which helps in eliminating information asymmetry. Moreover, correct and timely disclosures play an essential role in the proper functioning of the securities market and failure to do so results in depriving the investors from taking well informed investment decision,” said Sebi’s adjudication officer K Sarvanan in the order.

In its response on Sebi’s show cause notice, UP Power Corporation conceded that some of the disclosure lapses happened especially in the context of filing of half yearly results and it has assured the regulator that ever since the shortcomings have been pointed out by stock exchanges, the corporation has taken corrective measures to ensure compliance.

The compliance lapses in public sector undertakings has gone up significantly ever since the market regulator released new corporate governance norms in 2018. The state-owned entities have been claiming that they shouldn’t be subject to any regulatory action on such grounds since their boards are government appointed and hence there may be practical difficulties in complying with Sebi norms. However, in absence of any explicit exemption, the state-owned entities have no other option but to comply with these norms, say legal experts.

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