New Delhi: Terming the recent action by the Securities and Exchange Board of India action against DLF Ltd as "harsh", the Associated Chambers of Commerce and Industry (Assocham) on Wednesday questioned the role of merchant bankers, advisors and other intermediaries involved in a public offer process and said "regulatory activism" should not hamper business environment.
Sebi has slapped a three-year ban on realty major DLF as well as its six top executives including chairman K P Singh from the capital market for "active and deliberate suppression" of material information at the time of its IPO.
Industry body Assocham in a a statement said Sebi has meted out very harsh punitive treatment to corporates listed and traded on the stock market on grounds of small technical provisions involving legal interpretations of the regulations.
However, other industry bodies such as CII and PHD Chamber of Commerce and Industry declined to comment. Real estate industry bodies CREDAI and Naredco also did not offer any comments.
No one from Ficci was available to comment on the matter.
According to Assocham, it is exactly to deal with such technical and bureaucratic jargons and provisions that the corporates engage intermediaries like merchant bankers, legal advisors, auditors, investment advisors and registrars at the time of issuance of the initial public offering (IPOs) for hefty fees.
"The moot point, therefore is, should these intermediaries not be fixed any responsibility if there is purported oversight of these small technical regulations," it said.
Questioning the role of intermediaries in this case, Assocham said the issuer of IPOs depends heavily on these intermediaries to make sure that all the legal procedures are met.
"... while the industry is all for the fair play, activism on the part of market regulators would hurt the investment climate and increase the policy risks," it said.
Assocham also said that such instances would dent the confidence of foreign investors.
Without commenting on the merits of the case, Naredco chairman Navin Raheja later said, "Things should be seen in a larger perspective. We in India should respect the hard working entrepreneurs like Mr K P Singh who we must credit for building a global city Gurgaon."
Source - NDTV.profit