ED Heat on SRK Over Undervalued Shares

Published: 12th November 2015 04:30 AM  |   Last Updated: 12th November 2015 06:54 AM   |  A+A-

MUMBAI:The Enforcement Directorate (ED) has quizzed actor and Kolkata Knight Riders (KKR) co-owner Shah Rukh Khan in connection with alleged financial irregularities pertaining to foreign exchange in the IPL.

SRK.jpgAlmost a week after it served him a notice, the ED on Tuesday recorded his statement here on irregularities in the sale of shares of his Knight Riders Sports Pvt Ltd (KRSPL) to a Mauritius-based company. Khan is the owner of KRSPL, which runs KKR. Officials said Khan cooperated with them during his four-hour questioning and provided documents related to the transfer of shares.

The case, dating back to 2008-09, pertains to the share sale of KRSPL, owned by Khan’s Red Chillies along with Juhi Chawla and her husband, to the Mauritius-based firm owned by Chawla’s husband Jay Mehta. The ED is probing allegations that shares sold to the Mehta-owned Sea Island Investments were undervalued eight to nine times.

Khan had faced the ED in 2011 when he was quizzed about alleged foreign exchange violation of about Rs 100 crore. At the time of incorporation in 2008, Red Chillies had 9,900 shares of KRSPL. The valuation report, made by the ED’s external agency last year, said that when the equity shares of KRSPL were issued to Sea Island Investments, the fair value per share of KRSPL should have been between Rs 70 and Rs 86. However, the shares were issued at a value of Rs 10 each.

Under the Foreign Exchange Management Act (FEMA), the price of shares issued to individuals residing outside India should not be lower than the price set by market regulator SEBI in case of a listed company, or on the basis of fair valuation of shares by a chartered accountant, according to guidelines of erstwhile the Controller of Capital Issues.

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