The Securities and Exchange Board of India (SEBI) on Thursday issued an interim order cum show cause notices against Brightcom Group Ltd (BGL) and four other persons for irregularities in the financial statements and non-disclosure of material information.

The noticees Suresh Kumar Reddy, Vijay Kancharia, Yerradoddi Ramesh Reddy, and Y. Srinivasa Rao were asked not to sell their shareholding in Brightcom Group through their family members or through companies in which they or their family members are directors until further orders, Sebi said.

Also, Sebi ordered Brightcom Group to undertake the examination of its consolidated financial statements for the period 2014-15 to 2021-22 to ensure that the same are in compliance with all the applicable accounting standards and submit the statement of the impact of all the non-compliances within three months from the order.

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Further, Sebi said Brightcom Group must publish on the stock exchanges platform, within seven days from the date of this order, the statement showing the correct shareholding pattern, for all the quarters.

The regulator also asked Brightcom Group to appoint at least one independent director on its board of directors as a director on board of directors of each of its material subsidiaries within fifteen days.

Sebi in the order also asked Brightcom Group to publish the standalone financial statements of each of its subsidiaries on its website, for the period between FY 2014-15 and FY 2021-22, within fifteen days.

BGL shall ensure that, for the purposes of quarterly consolidated financial results, at least 80 percent of each of the consolidated revenue, assets and profits, respectively, is subjected to audit or in case of unaudited results, subjected to limited review starting from quarter ending March 31, 2023, the market regulator stated.

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According to Sebi's findings, a number of deficiencies in the books of accounts and other information pertaining to Brightcom Group's foreign subsidiaries were observed. This mainly pertained to assets impaired in FY 2019-20 to the tune of Rs 868.30 crore.

BGL had recorded an impairment of Rs 863.80 crore in the consolidated financial statement for the FY 2019-20. However, on examining the financial statements of BGL, no impairment of assets in FY 2019-20 was observed. This indicated that the said impairment was on account of subsidiaries, Sebi said.

Promoters kept disposing of shares from 2014 onwards till 2022 and none of this was reported to the exchanges and the incorrect shareholding pattern was given in 31 quarters out of 34, Sebi asserted.

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SEBI issues showcause notices to Brightcom Group, four others on alleged fraud

The noticees Suresh Kumar Reddy, Vijay Kancharia, Yerradoddi Ramesh Reddy, and Y. Srinivasa Rao were asked not to sell their shareholding in Brightcom Group through their family members or through companies in which they or their family members are directors until further orders, Sebi said.

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SEBI issues showcause notices to Brightcom Group, four others on alleged fraud

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SEBI issues showcause notices to Brightcom Group, four others on alleged fraud

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