India’s markets’ regulator Securities and Exchange Board of India on Tuesday imposed penalties totalling Rs 50 lakh on three former senior executives of Future Retail Limited, including former chairman and managing director Kishore Biyani, for alleged violations related to disclosure norms and related-party transactions.
According to Sebi’s detailed 202-page order, Kishore Biyani and former managing director Rakesh Biyani were each fined Rs 20 lakh, while former chief financial officer CP Toshniwal was penalised Rs 10 lakh.
The regulator found that Future Retail had failed to adequately disclose certain related parties and related-party transactions in its annual reports. The company was also accused of not obtaining mandatory approvals from the audit committee and shareholders for several transactions, as required under regulatory norms.
Sebi clarified in its order that the matter did not involve a ‘complete defiance’ of disclosure obligations, but rather ‘partial disclosures’ and repeated lapses in compliance.
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“This case is not one of total non-compliance but one involving incomplete and insufficient disclosures,” the regulator observed.
The watchdog further noted that Future Retail repeatedly defaulted in identifying and reporting related-party relationships and transactions, while also neglecting to seek the necessary approvals from the audit committee and shareholders in multiple instances.
Sebi held Kishore Biyani and Rakesh Biyani vicariously responsible for these violations due to their leadership roles within the company. The order also stated that Toshniwal was liable for aiding and facilitating the occurrence of these defaults.
The regulator criticised the company’s top management for allegedly reassuring the audit committee that all compliance requirements were being met despite persistent lapses.
“Despite repeated defaults, Noticee No. 1 and 2 continued to placate the concerns raised by the Audit Committee by representing that everything was in order at FRL,” the order stated.
Through these actions, Sebi concluded that the officials had violated provisions of the Listing Obligations and Disclosure Requirements Regulations governing corporate disclosures and transparency obligations for listed companies. All three former executives have been directed to deposit the penalties within 45 days.
Meanwhile, Future Retail continues to undergo insolvency proceedings before the National Company Law Tribunal. In July 2022, the tribunal admitted the company into the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 and appointed a resolution professional to oversee the process.
Once considered one of India’s largest retail chains under the Future Group umbrella, Future Retail has faced severe financial stress in recent years, eventually leading to insolvency proceedings and regulatory scrutiny over its governance and disclosure practices.
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