Kirloskar Oil Engines Limited (KOEL) has filed an appeal before the Hon’ble Securities Appellate Tribunal (SAT) challenging a directive issued by the Securities and Exchange Board of India (SEBI). The directive, communicated via a letter dated December 30, 2024, advised the company to disclose the Deed of Family Settlement dated September 11, 2009, under Regulation 30A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR).

Background of the Case

• SEBI Directive: On December 30, 2024, SEBI issued a letter to KOEL advising disclosure of a family settlement deed under SEBI LODR Regulation 30A.
• Company Response: KOEL maintains that the disclosure is not required under the regulation and has sought judicial intervention to challenge SEBI’s directive.

The company informed stakeholders of this development through a regulatory filing on January 4, 2025.

Details of the Deed of Family Settlement

The Deed of Family Settlement, dated September 11, 2009, involves agreements among family members regarding ownership and management of assets and businesses. SEBI's interpretation deems the settlement significant enough to require disclosure under the enhanced transparency guidelines of Regulation 30A.

However, KOEL has contested this requirement, stating that:

• The agreement does not affect its current business or operations.
• Disclosure may breach privacy and confidentiality agreements among family members.

Regulatory and Legal Implications

Regulation 30A under SEBI LODR mandates companies to disclose material events or information that may have a significant impact on their business. SEBI’s letter has sparked debate on the applicability of the regulation to historical agreements with no immediate financial or operational impact.

The appeal before SAT will address key questions, including:

1. Whether the 2009 family settlement qualifies as material information under Regulation 30A.
2. The balance between corporate transparency and privacy rights.

Company Statement

KOEL, in its regulatory filing, stated:

“The Company has filed an appeal before the Hon’ble Securities Appellate Tribunal challenging the SEBI letter dated December 30, 2024, advising the disclosure of the Deed of Family Settlement dated September 11, 2009.”

The company reassured investors that it remains committed to regulatory compliance and corporate governance while protecting its legal rights.

Next Steps

The Securities Appellate Tribunal (SAT) will review the case and issue a ruling. If the appeal is denied, KOEL may need to disclose the settlement deed as per SEBI’s directive.

Impact on Investors:

• A ruling in favor of SEBI could set a precedent for increased disclosures in historical agreements.
• If SAT upholds KOEL’s appeal, it may limit SEBI’s reach regarding private agreements.

KOEL’s appeal underscores the ongoing evolution of corporate governance norms in India and the fine line between regulatory oversight and corporate independence.

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