Sebi Slaps Rs 6 Lakh Fine On EbixCash, Ebix For Disclosure Lapses

Capital markets regulator Sebi on Thursday slapped a fine of Rs 6 lakh on EbixCash Ltd and its promoter entity Ebix Inc for flouting disclosure norms related to the company's proposed initial public offering ( IPO ).

EbixCash, a financial services company, had filed its draft red herring prospectus (DRHP) with the regulator in March 2022, but later withdrew it in December last year.

The penalties were slapped after the regulator's investigation into alleged violations of the Sebi's ICDR (Issue of Capital and Disclosure Requirements) rules.

The order came after Sebi allegedly found instances of non-compliances against EbixCash, Ebix Singapore and Ebix Inc, while issuing its observations on the DRHP dated March 2022, related to the proposed IPO of EbixCash filed with Sebi by the lead manager to the issue.

In a 78-page order, Sebi found that EbixCash and Ebix Inc failed to adequately disclose material information, including regulatory actions by the Reserve Bank of India ( RBI ), arbitration rulings, and changes in the utilisation of IPO proceeds detailed in the DRHP.

The regulator noted that a "Letter of Displeasure" issued by the RBI in March 2023, regarding the gift card business of an EbixCash subsidiary, Ebix Payment Services, which was inadequately disclosed. This omission was deemed significant, as the regulatory action impacted the company's financial reporting.

In addition, Sebi flagged inconsistencies in press releases issued by Ebix Inc, which included statements about arbitration rulings and adjustments in revenue recognition. These statements, the markets watchdog said, contradicted or omitted details from the DRHP filed with the regulator.

In its defence, EbixCash argued that the disclosures were in line with regulatory requirements and maintained that it had promptly filed an updated DRHP incorporating necessary details. Further, Ebix Inc contended that Sebi lacked jurisdiction over the matter, particularly since it is a foreign entity.

However, the regulator dismissed these arguments, emphasising the need for consistent and transparent disclosures to safeguard investor interests. While imposing the fine on both the entities, Sebi also highlighted the responsibility of issuers and their promoters to ensure that public communications align with the offer documents.

Accordingly, the regulator slapped a fine of Rs 3 lakh each on EbixCash Ltd and Ebix Inc for not complying with the disclosure norms.