Chennai: The Enforcement Directorate (ED) has levied a fine of Rs 5 crore on truck financier Shriram Transport Finance Company Ltd (STFC), for breach of of provisions under the Foreign Exchange Management Act where share warrants were issued to a person in violation . The fine was imposed on erstwhile Shriram Holdings (Madras) Private Limited (SHMPL) that later merged with STFC (in 2012). The ED has also levied penalty of Rs 50 lakh each on three former directors of SHMPL.
STFC has said it is examining the order and will examine all options — including contesting — to take the matter to closure. In a statement to exchanges, STFC said, “The company represented itself with relevant information and facts that it was of the bona fide view that it had not contravened any of the provisions of FEMA. However, we received an order dated March 4, 2020 from ED yesterday (March 9, 2020). The order imposes on penalty of Rs 5 crore in connection with the above matter citing contravention of provisions of Section 6(3)(b) of FEMA, 1999 read with Regulation 4 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000.” The company said it continues to believe that it had relevant approval for foreign equity participation of up to 74% by way of investment through subscription and subsequent acquisition of up to 74% of the equity shares of SHMPL.
SHMPL issued warrants to the extent of Rs 243.6 crore in 2006 which were converted into equity shares within the above-mentioned limit.
Source: timesofindia.indiatimes.com