Ola Electric Mobility Ltd has recently faced intense regulatory scrutiny, causing a notable impact on its stock performance. On Wednesday, the company’s shares fell by 4.8%, reaching a low of ₹75.36 on the BSE. Over the past month, the stock has seen a sharp decline of 18%. Here’s a closer look at the reasons behind this drop and the regulatory challenges Ola Electric is currently facing.

SEBI Flags Disclosure Norm Violations

The Securities and Exchange Board of India (SEBI) issued a warning to Ola Electric for non-compliance with disclosure norms. Under Regulation 4(1)(h) of the Listing Obligations and Disclosure Requirements (LODR), listed companies must disclose material information in a timely and transparent manner.

However, SEBI found Ola Electric in violation of these norms when Bhavish Aggarwal, the company's promoter and Chairman-cum-Managing Director, shared crucial information on X (formerly Twitter) before notifying the stock exchanges.

Timeline of Events

• December 2, 2024, 9:58 AM: Bhavish Aggarwal announced material information on X.
• 1:36 PM (BSE) and 1:41 PM (NSE): The same information was disclosed to stock exchanges.

This delay breached Regulation 30(6)(ii), which mandates disclosures to exchanges within 12 hours of an event or information.

Impact on Stakeholders

Ola Electric’s decision to prioritize a social media announcement over timely exchange disclosure has raised concerns about investor equality. SEBI emphasized that such actions compromise principles of transparency and fairness. The company also violated Regulation 4(1)(d), which ensures that all investors have access to adequate and timely information.

Consequences and SEBI’s Recommendations

SEBI has taken a strict stance on Ola Electric’s disclosure violations and issued a formal warning. The regulator outlined the following measures:

• Enhance Compliance Standards: Ola Electric must strengthen its adherence to regulatory norms to prevent similar issues in the future.
• Board-Level Accountability: SEBI has directed the company to present its communication and corrective actions to the Board of Directors.
• Promote Transparency: SEBI’s warning letter must be made publicly available on all stock exchanges.

Non-compliance with these directives could result in stricter enforcement under the Securities and Exchange Board of India Act, 1992.

Additional Legal Development: CCPA Notice

In a related development, Ola Electric has received a Show Cause Notice from the Central Consumer Protection Authority (CCPA). The Karnataka High Court has granted the company a six-week extension to submit its response and necessary documents. Ola Electric has assured compliance within the extended deadline.

Conclusion

Ola Electric Mobility’s recent challenges highlight the critical importance of timely and transparent disclosures in protecting investor interests. These regulatory actions serve as a reminder for all companies to uphold the principles of fairness and transparency in their governance practices. As Ola Electric addresses its compliance gaps, adhering to SEBI guidelines will be key to rebuilding investor confidence and stabilizing its market position.