Mumbai: Market regulator Sebi has dropped charges against Suzlon Energy's former non-executive independent director, Pradip Kumar Khaitan, that had alleged him responsible for delay in implementing the code of conduct related to prevention of insider trading regulations.
The regulator has observed from the details of board meeting attendance provided by Suzlon that Khaitan did not attend the meetings wherein the issue of change in the code of conduct was to be discussed.
"The noticee (Khaitan) was not present in any of the four board meetings dealing with the issue of change in the code of conduct, it would be difficult for the noticee to monitor this issue," Securities and Exchange Board of India (Sebi) said in its order dated September 30.
"Although the entire Board of the company is responsible for the delay of over 2 years in the implementation of the code of conduct, it would be difficult to attribute the said delay on the noticee," the regulator said.
Accordingly, Sebi gave Khaitan "benefit of doubt for the delay caused in implementation of code of conduct by Suzlon" and "disposed of" the matter.
The case relates to a Sebi probe into various price sensitive disclosures made by Suzlon for the period from November 3 - December 2, 2009.
During the course of investigation Sebi observed that Suzlon had amended its code of internal procedures and conduct for prevention of insider trading for listed companies, as required under Sebi norms, after a delay of more than 2 years.
While Sebi had notified norms in this regard on November 19, 2008, Suzlon had implemented them on February 4, 2011.
Further, no mechanism for pre-clearance of trades was incorporated in the code of conduct despite being mandated under the 'Prohibition of Insider Trading Regulations', the market regulator said.
Sebi noted that the code of conduct was to be implemented under the overall supervision of Suzlon's board of directors.
Khaitan was a non-executive independent director of Suzlon during the relevant period, Sebi noted.
"... The board was aware of the requirement to implement a new code of conduct and in spite of this, the board deferred the deliberation on the code of conduct for two meetings," Sebi said.