Family settlement deeds must be disclosed by feuding Kirloskars, Sebi informs the Supreme Court

In a new development in the family dispute, the Securities Exchange Board of India (SEBI) informed the Supreme Court on Tuesday that Kirloskar Oil Engines (KOEL) and Kirloskar Brothers (KBL) will be required to disclose their 2009 Deed of Family Settlement (DFS) in accordance with the amendment in its 2015 LODR Regulations.

SEBI’s stance aligns with the Kirloskar Brothers’ assertion, led by Sanjay Kirloskar, that a family settlement agreement constitutes a material event, thereby mandating disclosure for KOEL, a listed entity.

Although KBL is predominantly owned by Sanjay Kirloskar, KOEL is under the control of his younger brothers, Atul, Vikram, and Rahul Kirloskar.

SEBI, in its recent affidavit, emphasised the importance of disclosure for both entities, emphasising the need for regulatory certainty. The amendment to the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 necessitates the disclosure of any agreement impacting the management or control of listed entities.

This move aims to prevent ambiguity arising from differing interpretations of documents, ensuring clarity and adherence to regulatory norms. The Supreme Court, led by Justice Surya Kant, granted KOEL two weeks to verify and respond to SEBI’s stance.

The ongoing legal battle stems from KBL’s allegation that KOEL failed to comply with listing regulations, prompting SEBI’s involvement. Despite SEBI’s previous refusal to intervene, citing the private nature of the DFS, the matter escalated to the Supreme Court, indicating the complexity of familial and regulatory dynamics within corporate governance.