Tribunal Sets Aside Sebi Decision on Oracle Financial Services Matter

Mumbai: The Securities Appellate Tribunal (SAT) on Tuesday set aside a decision by the Securities and Exchange Board of India (Sebi) where it held that Oracle Financial Services Software violated listing norms with respect to fixing record date for interim dividend.

The case relates to Sebi's decision that the time gap between book closure and record date fixed by Oracle Financial for the purpose of interim dividend was less than 30 days, in violation of clause 16 of Listing Agreement.

Finding prima facie "no merit in the contentions raised" by Sebi, the tribunal in an order on Tuesday asked exchanges BSE and NSE to fix September 25 as record date for interim dividend. Earlier, the firm had decided the record date as September 24.

"We make it clear that passing of our order will not come in the way of Sebi initiating any proceedings against the appellant relating to interpretation of clause 16 of the Listing Agreement and pass appropriate orders in accordance with law," the tribunal noted.

Oracle Financial had declared book closure for the period from September 8 to 12. On September 8, the company had intimated stock exchanges that during the shareholders' meeting - on September 12 -- an interim dividend would be declared.

An interim dividend of Rs 485 per share was declared and record date in this regard was fixed as September 24, while payment date was to be September 29. On the basis of clause 16 - whereby the time gap between a book closure and a record date should be 30 days - exchanges referred the matter to Sebi.

Sebi, on September 19, informed the bourses that the record date fixed by Oracle Financial was in violation of clause 16. The same was communicated to the company, which then approached SAT.

In its order, the tribunal noted that provision contained in clause 16 referred to 30 days gap between two book closures and two record dates and not between a book closure and a record date.

"... the very fact that the word two is used prior to the words book closures is suggestive of the fact that the time gap is intended between two book closures and two record dates and not between a book closure and a record date," SAT said.

Noting that it had been already announced that dividend would be paid on September 29, "it is difficult to envisage as to how the investor interest would be jeopardised if record date is fixed as September 24 and payments are made on September 29".

However, taking into consideration the difficulty for BSE to update the trading system within such a short time, SAT has decided to keep the record date as September 25.

"We make it clear that passing of our order will not come in the way of Sebi initiating any proceedings against the appellant relating to interpretation of clause 16 of the Listing Agreement and pass appropriate orders in accordance with law," the tribunal said.