Empowered to lift corporate veil: Sebi

livemint.com:

MUMBAI : The Securities and Exchange Board of India (Sebi) on Wednesday said it is statutorily empowered to lift the corporate veil and find out the truth whenever the interests of the investors are affected or likely to be affected. Sebi’s comments came while arguing in the Bombay Dyeing matter before the Securities Appellate Tribunal (SAT). A bench led by Justice Tarun Agarwala was hearing Bombay Dyeing’s petition challenging Sebi’s October 2022 order against the company.

According to the order, Bombay Dyeing & Manufacturing, its promoter Nusli Wadia and his sons Ness and Jehangir, Scal Services, and five other people were banned from the capital market by Sebi. Besides, the regulator had also imposed a penalty of ₹15.75 crore for alleged fraud in falsifying the company’s financial statements. The SAT, however, stayed the operation of the Sebi whole-time member’s order during the pendency of the company’s appeal.

On Wednesday, Gaurav Joshi, senior counsel for Sebi in the matter argued that “In the securities market, Sebi Act empowers Sebi to take actions in the interest of protecting the interests of the investors and hence lifting the corporate veil to the extent to identify who controls a regulated entity cannot be faulted. Without such a power Sebi will be a mute spectator to many of the corporate misdeeds which may jeopardize the interests of investors." “Given the mandate of Sebi to protect the interests of investors in the securities market Sebi is statutorily empowered to lift the corporate veil and find out the truth whenever interests of the investors are affected or likely to be affected," the senior counsel said while citing an earlier SAT order in the Sahara Asset Management Co. and Ors.