e- Clerx BUY BACK-- Misuse of Regulations

SMALL INVESTORS’ WELFARE ASSOCIATION

Email : SirenBajao@gmail.com

 Posted on 24^th July 2020

TEXT OF LETTER SENT TO SEBI

eCLERX completed recently announce buyback by company in 9 working days ( no buying on 3 days ) as under :

DATE                   QTY

15-7-20                    66,000

16-7-20                   14,00,000

17-7-20                    1,10,814 

20-7-20                     40,000

21-7-20                     3,03,500     

22-7-20                      1,73,501

TOTAL                      20,93,815

The following are very serious observations which SEBI must look into :

1 On detailed scrutiny of large volume on 16-7-20 , we find that out of 1400000 shares purchased by the company,  1126444 shares were purchased from Franklin Templeton Mutual Fund. This constitute 53.79% of maximum buyback size quantity and this is bought from one entity. That too on very second day after buyback of shares was started by the company.

2. This fact about purchase from a single entity should have been disclosed in "Daily Reporting of Shares Bought" by the company which has not been done. 

3. Sebi should have a percentage cap of maximum buy size on buying from one entity.

    Only one or two individuals should not be allowed to benefit of buyback opportunity          extended to all shareholders. Sebi always give preference to minority shareholders.

4. Whether this buyback was announced to bail out troubled Franklin Templeton Fund.

5. Who put order first ? Whether buy order was put first or sell order was put first ? This may bring out Insider Trading violations committed by both party involved,

6. Whether SEBI Regulations needs to be tightened so that companies do not deprive small shareholders the exit opportunity of buyback for which Sebi has permitted a maximum time frame of 6 months to companies to complete the buyback.

UMANATH AGARWAL

   

In tender method special quota of 15% is fixed for small shareholders but in the open market purchase like this more than 50% of the quota was usurped by one single entity.

May we suggest that  

i) there should be a limit of maxium 2% to be bought from one single shareholder during the course of the entire offer and 

ii) in order to allow full opportunity to all the shareholders, no more than 2% of the total amount to be bought can be bought in one single day.