New Delhi: The Supreme Court on Tuesday upheld a Rs 30-lakh penalty imposed on Reliance Industries Limited (RIL) and two of its senior compliance officers by the Securities and Exchange Board of India (SEBI).
The penalty was slapped on RIL for failing to promptly disclose information regarding Facebook’s 2020 investment in Jio Platforms, and that market integrity demands transparency from major corporate players.
Reliance had challenged a Securities Appellate Tribunal (SAT) order of May 2, which had affirmed SEBI’s findings of delayed disclosure.
On Tuesday, a bench of Chief Justice of India (CJI) Surya Kant and Justice Joymalya Bagchi dismissed RIL’s plea, stressing that when news of a deal of such magnitude surfaces and has the potential to sharply influence stock prices, the company involved cannot remain silent.
“If unconfirmed media reports also im
pact your business, you are bound to disclose such information. These are components of ethical values, and in such matters, there cannot be any leniency or relaxations. If you are a big entity, the onus is bigger. You must meticulously comply with all regulations,” the bench told RIL’s counsel, senior advocate Ritin Rai, during the hearing.
The top court noted that media reports said RIL and Facebook Inc were in preliminary discussions on investments by Facebook in Jio Platforms Limited (JPL), a subsidiary of RIL. There was a 15% surge in RIL’s share value.
On September 30, 2019, RIL and Facebook executed a confidentiality and non-disclosure agreement and on March 4, 2020, executed a non-binding term-sheet.
“The moment this news came, and it was everywhere that a huge investment is coming in, should you not inform people when it is going to impact the markets?” the bench asked.
When RIL’s counsel contended that the agreement was still under negotiation and therefore did not require disclosure, the bench disagreed. “That also is information you should give. You could have said that there is no finality. An official word from your side would have helped. The very fact that you chose to remain silent is itself a violation,” the CJI-led bench said.