Sebi holds PNB Housing board accountable, co says followed rules, BFSI News, ET BFSI



The tussle between PNB Housing Finance and the Securities and Exchange Board of India (Sebi) is getting fiercer.

Securities and Exchange Board of India (Sebi) has questioned the role played by the directors of PNB Housing Finance in

the planned preferential allotment of shares to the Carlyle Group, in a letter, sent late last month.

“Keeping in view the aforesaid apparent transgression of the law, the company and the board of directors are called to explain as to why it cannot be construed that the directors have failed to discharge responsibility cast upon them in law and consequently why appropriate actions in terms of law be not considered for such failure.” Sebi said in a letter to PNB Housing Finance.

Apart from asking the company to put the vote on the Carlyle deal on hold, Sebi had told PNB Housing to appoint an independent valuer and ascertain whether the allotment price was fair.

PNB Housing has moved the Securities Appellate Tribunal against the Sebi order.

According to PNB Housing’s articles of association (AoA), an independent valuation report is needed before any new allotment.

The company law does not require engaging the services of registered valuers when a listed company is making a preferential issue, PNB Housing Finance told the tribunal.

It said that AoA cannot override the Securities and Exchange Board of India’s ICDR (Issue of Capital and Disclosure Requirements) regulations, which listed firms have to follow for issuing preferential allotments.

Parent company differs

PNB Housing Finance and its parent Punjab National Bank are on different pages when it comes to the housing finance company’s proposed preferential issue worth Rs 4,000 crore to entities led by The Carlyle Group Inc.

The Punjab National Bank, in a letter on July 4, said that its board of directors is of the view that the board of PNB Housing Finance should take cognizance of SEBI’s order and reconsider restructuring the deal in line with the regulator’s directive.

“Further to deliberations on the PNB letter, the board of the company, by a majority resolution passed on July 6, 2021, decided that since the issue involved relates to the interpretation of the law and is sub-judice before the Securities Appellate Tribunal (SAT), the board will await the SAT’s order on this issue,” PNB Housing said in a regulatory filing on Wednesday.

The board of PNB Housing met on July 5 and 6 over the communication from the parent company.