SEBI Issues Warning to Ola Electric for Disclosure Violations, Shares Drop 4% to Rs 76.14 Amid Investor Concerns
The Securities and Exchange Board of India (SEBI) has issued an administrative warning to Ola Electric Mobility for violating disclosure norms.
The violation pertains to Ola CMD Bhavish Aggarwal’s premature announcement of the company’s expansion plans on social media, prior to informing stock exchanges as mandated by regulations.
Regulatory Oversight and Social Media Misstep
On January 7, SEBI flagged Ola Electric for contravening disclosure rules under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The issue arose when Bhavish Aggarwal shared details of a four-fold expansion on X (formerly Twitter) at 9:58 AM on December 2, 2024. The official announcement, however, reached the stock exchanges hours later—at 1:36 PM on BSE and 1:41 PM on NSE.
Aggarwal’s post declared, “Taking the Electric revolution to the next level this month. Going from 800 stores right now to 4000 stores this month itself. Goal to be as close to our customers as possible.”
SEBI emphasized that listed entities must prioritize informing exchanges over other channels, ensuring timely and equal access to material information for all investors.
SEBI’s Strong Stance on Non-Compliance
The regulator criticized Ola Electric for neglecting its responsibility to its stakeholders.
In its letter, SEBI noted, “By making the aforesaid announcement first on a social media platform instead of disseminating it on the stock exchanges, [Ola Electric has] failed to take into consideration the interest of all [its] stakeholders.”
The letter warned Ola Electric to enhance its compliance practices, stating that any recurrence of such violations would invite enforcement action.
SEBI directed Ola to present the communication and corrective measures to its Board of Directors and to disseminate the letter on all listed stock exchanges.
Share Price Impact
Following the warning, Ola Electric’s stock took a hit. On January 8, the company’s shares fell 4% to ₹76.14 on NSE and 5% to ₹75.20 on BSE, before partially recovering to ₹77.13 by midday. This drop underscores the market’s sensitivity to regulatory non-compliance.
No Financial Ramifications, But a Serious Warning
Ola Electric clarified in an exchange filing that the warning has no financial impact on the company’s operations or performance.
However, SEBI’s letter underlines violations of key provisions, including regulations 4(1)(d), 4(1)(f), 4(1)(h), and 30(6), which mandate that disclosures be made through channels ensuring equal and timely access to all investors.
SEBI also pointed out that Ola’s announcement timeline failed to meet the 12-hour disclosure rule for material events. The warning reflects SEBI’s commitment to upholding transparency and fairness in market operations.
Expansion Plans and Delayed Execution
Aggarwal’s announcement highlighted Ola Electric’s plans to expand its store network from 800 to 4,000 locations by December 20, 2024.
The ambitious move was described as “probably the biggest single day store opening ever.” However, the rollout was ultimately executed on December 25, adding to the scrutiny surrounding the premature disclosure.
SEBI’s Final Word
In its letter, SEBI reiterated the seriousness of the violations: “The above violations have been viewed very seriously. You are hereby warned and advised to be careful in the future and to improve your compliance standards to avoid recurrence of such instances, failing which appropriate enforcement action may be initiated.”
Ola Electric was instructed to take corrective measures and ensure that all future disclosures adhere strictly to regulatory requirements.
The warning serves as a reminder to all listed entities about the importance of prioritizing transparency and investor interests.
The SEBI warning highlights the repercussions of sidestepping disclosure norms. While Ola Electric’s operations remain unaffected financially, the episode underscores the critical need for compliance with market regulations.
As companies like Ola Electric navigate the competitive EV landscape, adhering to these rules will be crucial in maintaining investor trust and market credibility.
