Vedanta Gets Sebi Warning for Executing Rs. 1,407 crores Deal Without Audit Panel Nod

The Securities and Exchange Board of India (Sebi) has warned Anil Agarwal’s Vedanta Ltd for executing a Rs. 1,407 crores related party transaction without prior approval of the company’s audit committee.

“The non-compliance is viewed seriously. You are hereby warned and advised to ensure compliance with applicable provisions of Sebi regulations. Any such aberration would be viewed seriously and appropriate action would be initiated,” the regulator wrote to Vedanta’s company secretary, Prerna Halwasiya.

During the year ended March 31, 2021, the company had entered into a transaction for the sale of investments of Rs. 1,407 crores with Hindustan Zinc as part of its treasury operations, for which prior approval from the audit committee as stipulated under listing regulation was not taken. The decision was subsequently ratified by the audit committee.

Sebi said the company submitted the transaction for ratification to the audit committee 47 days after the transaction. The company had said the transaction was done at arm’s length and in the ordinary course of business.

“In this regard, attention may be drawn, all related-party transactions shall require prior approval of the audit committee. Accordingly, the submission of the company that the transactions were done at arm’s length distance is not tenable,” the regulator said.

On the secretarial auditor’s observation on the delay of disclosure in a board meeting held on October 3, 2020, the company said it was due to unforeseen circumstances and that it would ensure that such delays would not happen again.

Vedanta has responded by saying the board at its meeting held on October 29,2021, had taken note of the Sebi letter and advised the company to ensure adherence to all applicable provisions.

“We would also like to state that the company has always been meticulous in complying with all the provisions of the Companies Act and Sebi regulations and will continue to do so,” the company said in its letter, filed with BSE on Saturday.

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