NEW DELHI :
Leading depository CDSL has frozen shareholding of the promoters of debt-ridden mortgage lender DHFL due to delay in announcement of the company's financial earnings, sources said on Monday.
The decision has been taken after the company failed to announce its first quarterly results, they said.
However, sources close to Dewan Housing Finance Corporation Ltd (DHFL) said the company results are expected to be announced in next few days, for which the board meeting is expected to be called for, they added.
In a filing to stock exchanges, DHFL said the meeting of its board of directors is scheduled to be held on October 17, 2019, to consider and approve the un-audited financial results for the first quarter ended June 30.
The delay in submission of the financial results by the company is on "account of resignation of the erstwhile statutory auditors and reasonable time required by the new statutory auditors to review the financial results".
The company has approved the appointment of K K Mankeshwar & Co., Chartered Accountants as the statutory auditors of the company consequent upon resignation of the erstwhile statutory auditors.
DHFL, which has been severely impacted by the NBFC crisis which unfolded late last year following the IL&FS bankruptcy, has defaulted on multiple commitments.
The Wadhawan family, which owns a little over 39% in the DHFL, has been looking at various ways of coming out of the stress. These include selling stakes in group entities, including in the flagship to the extent of giving up half of their stake.
Sources on Monday said CDSL, which allows investors to deposit securities by opening an account in electronic form (dematerialised), has frozen the entire shareholding of DHFL's promoters after the company delayed announcement of financial results.
Delay in announcing the results could be due to the resignation of DHFL's auditor.
"Since DHFL's auditors had resigned and a new auditor had been appointed at the AGM held on September 28, the company's first quarterly results had been delayed," one of the sources privy to the development said.
"Any action taken by the stock exchanges or depositories as a result of delay in submission of the above financial results by the company is purely procedural in nature and does not materially impact the company or the promoters," DHFL said.
Query sent to Central Depository Services Ltd (CDSL) about the freezing of promoters' holding remained unanswered.
Under the Listing Obligations and Disclosure Requirements (LODR) regulation, a company is required to submit financial results on a quarterly basis.
A depository can freeze the entire promoter shareholding of a firm in case of non-compliance with listing rules.
According to market experts, if any listed entity's results is delayed, the exchanges hold “on-account" the shareholding of the promoters of the said entity.
Hence this matter is procedural and no undue speculation is needed, they added.
In late September, DHFL floated a draft resolution plan under which it proposes to convert debt into equity. The proposal was subject to the approval of investors and bankers.
The housing financier is supposed to reach a debt resolution plan with its lenders shortly so that new funds start flowing into the company.
To generate capital, DHFL has sold its strategic investments, even in core retail financial services firms like Avanse, Aadhar, DHFL Pramerica AMC.