New Delhi: Capital markets regulator Sebi on Thursday slapped a fine of Rs 10 lakh on Future Retail Ltd for making inadequate and delayed disclosure regarding the interim order passed by Singapore International Arbitration Centre (SIAC).
The order came after the Securities and Exchange Board of India (Sebi) examined the concerns raised by Amazon.com regarding the Scheme of Arrangement between Future Group and Mukesh Dhirubhai Ambani Group.
In its order, Sebi said Future Retail had disclosed the initiation of arbitration proceedings by Amazon before SIAC on November 1, 2020, only after intervention of stock exchanges.
The information should have been disclosed within 24 hours of the event -- on or before October 6, 2020 -- as required under the LODR (Listing Obligations and Disclosure Requirements) rules.
It was observed that the interim order passed by SIAC on October 25, 2020 was in favour of Amazon, wherein the respondents were injuncted from taking any steps in furtherance or in aid of the Board Resolution of Future Retail on August 29, 2019 in relation to the 'scheme of arrangement' between Future group and Mukesh Dhirubhai Ambani Group.
Future Retail provided only inadequate disclosure on October 26, 2020. It provided a simple clarification on news items related to SIAC interim order in favour of Amazon in the matter of the Future-RIL deal instead of giving details of the arbitration proceedings and financial implications.
"I note that only after active intervention by stock exchanges, noticee (Future Retail) made disclosure regarding the SIAC interim order on November 1, 2020 wherein FRL provided full details of the initiation of arbitration proceedings, chronology of the events, details of interim order, impact of the interim order and all the direction of SIAC under...the LODR Regulations," Sebi Adjudicating Officer Amit Kapoor said.
The interim order was required to be disclosed adequately, accurately, explicitly timely and presented in a simple language not later than 24 hours. In this case on or before October 26, 2020, instead of November 1, 2020.
As Future Retail has violated LODR norms, Sebi levied a penalty of Rs 10 lakh on the company.
The legal dispute between the Future group and Amazon pertained to the sale of Future's retail assets to Reliance Industries Ltd (RIL) for Rs 24,713 crore. In April 2022, RIL called off the deal with Future Group.
In August 2020, Reliance Retail Ventures Ltd had said it would acquire the retail and wholesale business, and the logistics and warehousing business of Future Group for Rs 24,713 crore. The scheme of arrangement entailed the consolidation of Future Group's retail and wholesale assets into one entity Future Enterprises Ltd and then transfer to Reliance Retail.
The deal was contested by Amazon, an investor in Future Coupons.
In August 2019, Amazon had agreed to purchase 49 per cent of Future Coupons (which owned 7.3 per cent equity in BSE-listed Future Retail Ltd through convertible warrants), with the right to buy into the flagship Future Retail after a period of 3-10 years.
Amazon later dragged Future into arbitration at SIAC, which passed an interim award in favour of the US e-commerce major.