The top brass of Sun Pharmaceuticals Industries will pay Rs 2.36 crore to the Securities and Exchange Board of India (SEBI) towards settling charges by a whistleblower that Sun Pharma had diverted funds through related party transactions.

Share Market Live

NSE

Dilip Shanghvi, founder and Managing Director of Sun Pharma will have to pay Rs 62.35 lakh; Sudhir Valia, former whole-time director will pay Rs 37.41 lakh; Sailesh T Desai, Executive Director will pay Rs 37.41 lakh; Kalyanasundaram Subramanian, Executive non-independent director has been asked to pay Rs 36.97 lakh; Uday Baldota, CEO at Taro Pharmaceutical Industries will pay Rs 24.65 lakh; Sunil Ajmera, Company Secretary to pay Rs 18.70 lakh and Ashok Bhuta, Senior General Manager (legal and secretarial) will pay Rs 18.48 lakh as penalty.

A whistleblower in a letter to SEBI had alleged that Sun Pharmaceutical Industries and its wholly-owned subsidiary Sun Pharmaceutical Laboratories had been diverting funds through Aditya Medisales Ltd (AML), its sole distributor in India.

The letter also alleged that transactions with AML were ongoing for several years. However, AML was disclosed as a related party of SPIL only in FY 2017-18.

SEBI conducted a forensic audit and after investigating the matter, found that AML was a related party of SPIL even before the scheme of amalgamation, and Sun Pharma had not made the relevant disclosures.

Considering that the transactions with AML would have qualified as material related party transactions, it required approval of shareholders, the SEBI order said. "Disclosure of related party transactions with AML in the Annual Reports for FY 2015-16 and FY 2016-17, was not made," SEBI observed.

"Since a company acts through its board of directors and the directors are responsible for all the acts of omission and commission by the company. In view of the same, Shri Dilip Shanghvi was in-charge of its operations and decision-making process, therefore, it was observed that the Applicant had violated the provisions of regulations 4(2)(f), 23(2) and 23(4) of SEBI (LODR) Regulations, 2015," the SEBI order said.

Shanghvi filed a settlement order with SEBI, without admitting or denying the findings of fact and conclusions of law.