India's market regulator, SEBI, has reprimanded Ola Electric for publicizing its expansion plans on social media before formally notifying stock exchanges. This action violates regulatory disclosure rules for listed companies. The company revealed its plans online prior to informing the exchanges, breaching required procedures. SEBI's warning emphasizes the importance of following proper disclosure protocols. "SEBI stated Ola Electric violated disclosure rules."
SEBI sent an administrative warning letter to the electric vehicle manufacturer on January 7, citing multiple violations of listing and disclosure regulations.
The company's Chairman and CEO Bhavish Aggarwal had posted about plans for a four-fold expansion of company-owned stores on X (formerly Twitter) at 9:58 AM on December 2, 2024, hours before informing the exchanges at 1:36 PM (BSE) and 1:41 PM (NSE).
"The above violations have been viewed very seriously," SEBI stated in its letter, warning the company to improve compliance standards or face potential enforcement action. The regulator cited violations of four provisions under the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.
The violations include failing to provide timely information to stock exchanges, not ensuring equal access to information for all investors, and not considering stakeholder interests by prioritizing social media announcements over proper exchange disclosures.
Ola Electric informed exchanges that the warning has no material impact on its financials. The company has been directed to present the communication and corrective steps to its Board of Directors and disseminate them through stock exchanges.
The warning comes as Ola Electric faces other regulatory challenges, including an ongoing case with the Central Consumer Protection Authority (CCPA), for which the Karnataka High Court recently granted a six-week extension to submit its response.