On July 8 this year, the market regulator Securities and Exchange Board of India (SEBI) banned Allegro Capital Private Ltd and its majority shareholder, Kunal Ashok Kashyap, headquartered in Bengaluru, from trading on the stock market. for one year, ordered the return of unwarranted earnings of Rs 24.68 lakh with 12% interest for three and a half years, and penalized them with Rs 10 lakh each for insider trading in the shares of Biocon Ltd.
What SEBI or the regulatory authorities did not know at the time is that Kunal Kashyap is the “Protector” of the Deanstone Trust, created in New Zealand in July 2015 by Glentec International, the “Settlor”, based in Mauritius. Glentec, which owns shares of Biocon Ltd, is 99% owned by John McCallum Marshall Shaw, UK citizen and husband of Kiran Mazumdar Shaw, executive chairman of Biocon Ltd, a Rs 7,360 crore biotechnology company.
The Deanstone Trust is part of a complex structure, according to files reviewed by Indian express.
At the top is Deanstone Purpose Trust, whose administrator is Asiaciti Trust, a global business services company headquartered in Singapore. The Deanstone Purpose Trust was established to hold the shares of a company, Deanstone PTC Limited, through a nominee entity Cyreal Ltd. Deanstone PTC Ltd, in turn, is the trustee of Deanstone Trust of which blacklisted Kashyap is the protector.
The protector of a trust is appointed by the settlor – the one who creates the trust or the author – to oversee the trustee who administers the affairs of the trust.
In the case of Deanstone Trust, Kashyap, as protector, was supposed to be given the power to appoint and remove the administrator. He has overseen the assets of the trust since its inception in July 2015, according to Asiaciti. He was in fact Asiaciti’s contact for this transaction.
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According to the latest reports, Glentec held 19.76% in Biocon Ltd as of June 30, 2021, valued at Rs 9,583 crore based on the market price of Rs 404 per share on that day.
As a grantor, Glentec is the principal economic contributor to Deanstone Trust. Indeed, Kashyap is a financial advisor and protector of the Trust, the corpus of which comes from Glentec.
He is also director of the Mazumdar Shaw Medical Foundation with Kiran Mazumdar Shaw and her husband John Shaw.
What raises corporate governance questions is: Should Biocon Ltd and Glentec International use the services of Kashyap and Allegro Capital when there is an adverse order from the market regulator?
Asked about this deal with Kashyap, Kiran Mazumdar Shaw told The Indian Express, “Mr. Kunal Kashyap runs a financial advisory service and has been used by Biocon as well as Glentec. Mr. Kashyap advises several companies outside of Biocon. I understand that Mr. Kashyap’s SEBI case is currently pending before the SAT (Securities Appeal Tribunal) and therefore it would not be appropriate for me to comment further on this matter. “
Glentec International holds approximately $ 55 million in cash and investments, as well as real estate, including four properties in London, one in Barcelona and one in an upscale residential building in New York, with a cumulative value of ‘about $ 30 million. “The properties have not been transferred to the Deanstone Trust,” Kiran Mazumdar Shaw said.
Explaining Glentec’s track record, she said her husband started it in 1999 as an investment company from its foreign currency earnings to acquire the shares Unilever held in Biocon long before it became a listed company and for various other investments in real estate and public markets. “Glentec is a registered entity disclosed to both RBI and SEBI,” she said.
“Neither my husband nor I nor Mr. Kashyap are shareholders, trustees, directors, settlers or beneficiaries of the trust,” she added.
The Deanstone Trust’s “beneficiaries” are relatives of KMS (Kiran Mazumdar Shaw), an Indian passport holder, and JS (John McCallum Marshall Shaw) – Asiaciti Trust uses these initials to refer to the couple.
“The members of our two families are foreign nationals and beneficiaries of this trust. Any contribution received by a family member complies with the laws of that jurisdiction, ”said Kiran Mazumdar Shaw.
John Shaw was registered as a Director of Deanstone PTC Ltd in June 2016.