Tarun SharmaMoneycontrolThe Securities and Exchange Board of India (SEBI) may pass disgorgement order against PVR Cinema and its Founder and Chairman Ajay Bijli, on the profit-sharing deal with private equity firms Multiples Asset Management and L Capital, sources told Moneycontrol. In other words, PVR and Bijli will have to return the profits made from the deal.Termed an incentive fee agreement, the deal gave the promoters of PVR 20 percent of the excess profits earned by Multiples, over and above the 30 percent rate of return generated on its investment in PVR.In November last year, SEBI had issued a show cause notice to Ajay Bijli and PVR asking why action should not be taken against them for non-disclosure of the deal to ordinary shareholders. Ajay Bijli has already received one payment from Multiples after the firm sold a partial stake in the company in 2014. Multiples later bought an additional stake in PVR. L Capital exited its investment in PVR profitably in 2015."Such arrangements are common in unlisted companies, but if they happen in listed companies, it has to be disclosed to all investors,” a source told Moneycontrol, adding that a final order in the case will be passed shortly.The regulator is also learnt to be looking into how many other companies have entered into such arrangements without disclosing it to shareholders.JN Gupta, founder of SES Proxy firms said: “As per process of natural justice and fairness to all stakeholders any unfair gains that has been made must be disgorged if the regulator finds merits in the case. However, that action has to be taken for all the parties to the agreement. It cannot be the only party to be penalised”.
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