Two Entities Settle Case With SEBI Regarding Violation of AIF Rules, Pay Over Rs 17 Lakh

SEBI issued an order after Clean Max Energy Ventures and Clean Max Enviro Energy Solutions together filed a joint suo motu application seeking to settle the case without admitting to any conclusions.

Two entities settled with the Securities and Exchange Board of India (SEBI) in the case of Clean Max Renewable Trust regarding allegations of violation of AIF rules. The entities paid more than Rs 17 lakh to the markets regulator as a settlement amount. 

The order came after Clean Max Energy Ventures and Clean Max Enviro Energy Solutions together filed a joint suo motu application seeking to settle the case by neither admitting nor denying any conclusions, the regulator’s order revealed. 

SEBI’s whole-time members, Amarjeet Singh and Ashwani Bhatia, revealed that the regulator’s order said, “It is hereby ordered that any proceedings that may be initiated for the violations as are settled in respect of the applicants (Clean Max Energy Ventures and Clean Max Enviro Energy Solutions)”. The order was passed on Monday, reported PTI. 

Notably, Clean Max Renewable Trust is registered with SEBI as a Category II Alternative Investment Fund (AIF) and Clean Max Enviro Energy Solutions is the sponsor of the AIF, while Clean Max Energy Ventures, a wholly-owned subsidiary of the sponsor, is the investment manager.

Earlier in August 2021, Clean Max Enviro Energy Solutions inked an agreement under which Augment India I Holdings, LLC bought about 60 per cent of the issued and paid up share capital. Following the deal, the control of the sponsor was changed and an indirect revision was made in the control of the investment manager. 

According to the regulations, in case of a change in control of the sponsor/investment manager of AIF, consent of 75 per cent of the unit holders is needed or the dissenting unit holders should be provided an exit. The unit holders are allowed not more than one month to express their dissent. Regarding this, the AIF submitted that it gained the consent of all the unit holders. 

However, the consent was sought only on October 27, 2021, at a delay of 68 days. As such, the applicants submitted a settlement application to close the proceedings that might be initiated against them for delaying compliance with the norms and settled the issue at the recommended payment of Rs 17.40 lakh. Consequently, the applicants submitted the settlement amount and cleared the case.