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Ola Electric Faces SEBI Scrutiny Over Compliance Breach; Shares Plunge 5%
The Indian capital market regulator, the Securities and Exchange Board of India (SEBI) has issued a stern warning to take serious action against electric vehicle maker Ola Electric for violating disclosure norms. SEBI’s letter, dated January 7, 2025, was disclosed by the company in a filing to the exchanges made on January 8. Ola Electric suffered due to this, falling 5% on the BSE to ₹75.20 and rising slightly to ₹77.13 in the afternoon.
SEBI’s concerns arose from Ola CMD Bhavish Aggarwal’s premature social media announcement of corporate plans before making disclosures with stock exchanges. This was identified by SEBI as a rule violation that facilitates unequal and timely information dissemination to all investors.
The Specific SEBI Violations
SEBI pointed out that Ola Electric committed violations regulated under Section 4 (1) (d), Section 4 (1) (f), Section 4 (1) (h) and Section 30 (6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These rules require that companies should make information available to the public through the appropriate channels to investors.
The warning arose out of an announcement made by Aggarwal on 2 December 2024 detailing the company’s plans to add to its store network on X (previously known as Twitter) before it submitted the information to the BSE and NSE. SEBI's letter stated:
This is with reference to your disclosure on the stock exchanges dated December 2, 2024 wherein the information regarding plans for a four-fold expansion of your company-owned store network by December 20, 2024 was disseminated.
It is observed that the information was disseminated on the stock exchanges by you at 1:36 PM (BSE) and 1:41 PM (NSE) on December 2, 2024, it was announced beforehand on X (formerly Twitter) at 9:58 AM on December 2, 2024, by Bhavish Aggarwal, your promoter and CMD.
Effect and SEBI’s Warning Signal
SEBI pointed out the severity of the violation and reminded Ola that all disclosure notifications have to be first filed with the stock exchanges within 12 hours of the event. It warned: “By failing to first disseminate the information on the stock exchanges and instead announcing it on a social media platform, you have failed to provide equal and timely access to information for all investors.
SEBI demanded corrective steps, advising Ola to enhance compliance and submit the warning letter along with steps to be taken to the Board of Directors for its review. SEBI also directed Ola to disclose this communication on the exchanges as well.
Ola Faces Compliance Test
From the regulator’s directive, Ola has no room for error to keep itself afloat. Though there is no direct financial or operational tell-tale from SEBI on that front, it puts the company under scrutiny. Any future slippages can bring enforcement actions, as Ola Electric is looking to rebuild investor trust.