SEBI Rejects Estranged Relatives’ Promoter-Group Exclusion

Securities and Exchange Board of India (SEBI) rejected the company’s request to exclude three estranged relatives of promoter Deepank Bhandari from promoter-group disclosures. SEBI’s September 5, 2025 letter required the company to disclose the three relatives and their related entities, using applicable information available in the public domain.

Why did SEBI reject the promoter-group exclusion request?

SEBI rejected the promoter-group exclusion request because it did not grant the company relaxation from the applicable identification and disclosure requirement. The company had sought an exemption through its July 10, 2025 letter under Regulation 300(1)(c) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, known as the SEBI ICDR Regulations. The request sought relaxation from strict enforcement of Regulation 2(1)(pp), which the company cited as the provision governing identification of members of its promoter group.

The company said Deepank Bhandari had no contact with Rajinder Singh Grover, Anju Singh and Arjun Singh Grover because of estrangement. The Red Herring Prospectus identifies the three people as Bhandari’s spouse’s father, spouse’s mother and spouse’s brother, respectively. SEBI stated in its September 5, 2025 letter that the exemption request could not be acceded to and directed the company to disclose the concerned relatives and their related entities as part of the promoter group.

The decision concerns the disclosure perimeter rather than a change in the company’s stated promoter count. The company reported five promoters as of the Red Herring Prospectus date: Harshil Nuwal, Subhash Chandra Nuwal, Uma Nuwal, Deepank Bhandari and corporate promoter Sona Polysipn Private Limited. Harshil Nuwal, Subhash Chandra Nuwal and Uma Nuwal were described as promoters since inception, while the company allotted equity shares to Bhandari on March 31, 2022 and to Sona Polysipn Private Limited on May 31, 2022.

Which people and entities must remain in the promoter group?

The promoter-group disclosure must include Rajinder Singh Grover, Anju Singh and Arjun Singh Grover, together called the Concerned Relatives by the company. SEBI also directed the company to include applicable disclosures concerning their related entities. The supplied disclosure does not identify which specific entities in the promoter-group list are associated with each of the three Concerned Relatives.

The company’s natural-person table places the three Concerned Relatives within the nine entries listed under Deepank Bhandari. The other six entries under Bhandari are his father Kailash Bhandari, mother Anita Bhandari, sister Shikha Nuwal, spouse Sonam Singh, son Shivaansh Bhandari and spouse’s sister Arpita Singh. The table therefore distinguishes the disputed three persons by an asterisk linked to the SEBI exemption discussion, rather than omitting them from the promoter-group list.

The 35-entity promoter-group list includes companies, firms and Hindu Undivided Families (HUFs). An HUF is a family-based legal and tax unit, and several listed HUFs identify a karta, the person managing the HUF. The list runs from Starnet Breeding and Research Farms Private Limited to Kailash Bhandari HUF, showing that the disclosed promoter group extends beyond the natural persons named in the relationship table.

How did the company prepare the disputed disclosures?

The company said it prepared disclosures about the Concerned Relatives from public-domain information available on a name-search basis. To comply with the SEBI ICDR Regulations and SEBI’s September 5, 2025 letter, the company said the information was included to the best of its knowledge and only to the extent it was publicly available and accessible. The company did not state that it obtained direct information, confirmations or undertakings from the three Concerned Relatives.

The public sources named by the company were Watchout Investors, TransUnion CIBIL Limited, BSE Limited’s list of debarred entities and National Stock Exchange of India Limited’s material on SEBI-debarred entities. TransUnion CIBIL Limited, also known as CIBIL, provides credit-information services. The company specified that its searches used names, which can produce public-record matches but do not by themselves establish that a matched person is the same person named in the promoter-group table.

The company expressly qualified the resulting information. It said it could not ascertain or ensure that name-search results referred to the same persons, and had not determined whether the information was accurate, complete or updated. The company therefore disclosed the Concerned Relatives following SEBI’s direction while retaining a stated limitation on identity matching and data verification.

What does the SEBI decision mean for the disclosure perimeter?

SEBI’s decision means estrangement and lack of contact did not remove the three Concerned Relatives from the company’s formal promoter-group disclosure perimeter. Regulation 2(1)(pp) is the identified legal basis for the promoter-group listing, while Regulation 300(1)(c) was the exemption route the company used in its July 10, 2025 request. The company’s disclosure describes the request as a bid for relief from strict enforcement, not as a request to alter the reported family relationships.

The distinction between promoters, promoter group and group companies remains material in the Red Herring Prospectus. The promoter group contains individuals and entities identified under Regulation 2(1)(pp), while group companies are defined separately. The company said group companies include, other than promoters and subsidiaries, companies with related-party transactions during the period for which financial information is disclosed, along with other companies considered material by its board.

The board’s August 10, 2026 resolution adds a materiality parameter for group companies. It covers companies disclosed in related-party transactions under Indian Accounting Standard 24, or Ind AS 24, and companies with one or more transactions in the most recent financial year or relevant sub-period that individually or cumulatively exceed 10% of the company’s total revenue. That threshold applies to identifying group companies and does not replace the SEBI-directed promoter-group inclusion of the three Concerned Relatives.

What uncertainty remains in the required disclosures?

The unresolved issue is the completeness and reliability of information gathered through public-domain name searches. The company stated that some promoter-group members had not consented to their inclusion and had not provided information, confirmations or undertakings required for promoter-group disclosures under the SEBI ICDR Regulations. The qualification is a disclosure limitation reported by the company, rather than a SEBI finding that any listed public record is incorrect.

The company also said that details of Connected Entities that may qualify as promoter-group members have not been disclosed in the Red Herring Prospectus. Its risk-factor disclosure says it cannot assure readers that information concerning non-cooperating promoter-group members is accurate, complete or updated. The disclosed perimeter can remain subject to those limits unless relevant records can be verified and additional information becomes available.

Conclusion

SEBI’s September 5, 2025 decision required the company to retain three relatives of Deepank Bhandari in promoter-group disclosures despite the company’s stated estrangement and absence of contact. The decision also extends to applicable disclosures about their related entities, while leaving the company’s stated five-promoter count unchanged.

The next point to watch is whether later disclosures provide verified information on the Concerned Relatives or identify additional Connected Entities. The company has disclosed its public-domain name-search method and its August 10, 2026 group-company materiality framework, but it has not resolved the completeness or identity-verification limits attached to the disputed disclosures.