Eraaya Lifespaces Limited has disclosed a significant change in the statutory audit structure of certain subsidiaries operating under Ebix Inc. The company made this announcement in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Key Points of the Announcement

• Auditor Change: One of the joint statutory auditors has decided to discontinue its association with certain Ebix Inc. subsidiaries.
• Reason: The discontinuation is due to non-alignment on certain commercial terms.
• Continuing Auditor: M/s K. G. Somani & Co. LLP, Chartered Accountants, will continue as the sole statutory auditor for the affected subsidiaries.
• Scope of Change: The modification only affects subsidiary-level audits and does not impact Eraaya Lifespaces Limited's statutory auditors or financial statements.
• Compliance: The change has been implemented in accordance with the Companies Act, 2013 and relevant regulations.

Impact and Implications

This change in the audit structure represents an internal realignment within the Ebix Inc. subsidiaries. It's important to note that this modification does not extend to Eraaya Lifespaces Limited itself or its other subsidiaries. The company has assured that the change complies with all applicable regulations and does not affect its overall financial reporting structure.

Investors and stakeholders should be aware that while this change affects certain subsidiaries, the parent company's financial statements and statutory auditors remain unaffected. This transparency in reporting changes to the audit structure demonstrates Eraaya Lifespaces' commitment to maintaining clear communication with its shareholders and regulatory bodies.

As the real estate sector continues to evolve, companies like Eraaya Lifespaces are adapting their corporate structures and processes. This change in the audit framework of its subsidiaries may be seen as part of the company's ongoing efforts to optimize its operations and ensure efficient financial oversight across its corporate structure.

Shareholders and potential investors are advised to monitor any further announcements from the company regarding its financial reporting and corporate governance practices.

Eraaya Lifespaces is embroiled in a legal dispute with a former Qualified Institutions Placement (QIP) investor, Veda Opportunities Fund, over the company's approved Preferential Issue. The real estate firm is now seeking guidance from the Securities and Exchange Board of India (SEBI) while defending its position in the Delhi High Court.

Legal Challenge and Court Orders

Veda Opportunities Fund, which was allotted 26,200 equity shares in Eraaya's QIP in August 2024, has filed a civil suit challenging the company's Preferential Issue approved at the 58th Annual General Meeting on September 28, 2024. The fund claims certain rights that Eraaya firmly denies, asserting they are 'fabricated, baseless, and wholly without merit.'

The legal proceedings have seen multiple twists:

1. An initial ex-parte interim order restrained Eraaya from issuing Compulsorily Convertible Warrants.
2. This order was later vacated when the court found that the plaintiff had concealed material information.
3. An appellate court has since reinstated the restraining order pending final disposal of the appeal.

Eraaya's Position and Share Transactions

Eraaya Lifespaces maintains that the QIP shares rank pari-passu with existing equity and do not confer any special rights or privileges. The company highlighted that Veda Opportunities Fund had sold its entire QIP allotment by January 2025, making subsequent secondary market transactions.

According to Eraaya, the pattern of repeated sale and repurchase of shares by the fund suggests an intent to perpetuate litigation and exert undue leverage, despite lacking a legitimate legal basis.

Regulatory Compliance and Future Actions

Eraaya Lifespaces has emphasized its commitment to compliance with all provisions of the Companies Act, 2013, SEBI (LODR) Regulations, and SEBI (ICDR) Regulations. The company stated:

"The Company continues to comply with all provisions of the Companies Act, 2013, SEBI (LODR) Regulations, and SEBI (ICDR) Regulations regarding disclosures, capital raising, and shareholder rights."

In addition to approaching the Delhi High Court, Eraaya is seeking formal guidance from SEBI to ensure transparency and regulatory compliance in its future capital raising initiatives.

Investor Communication

Eraaya Lifespaces has committed to providing regular updates to shareholders and investors as the legal matter progresses, in accordance with SEBI regulations and applicable laws. The company's stance remains firm that the claims regarding restrictions on further equity issuance are 'factually and legally unfounded.'

As this legal battle unfolds, investors and market watchers will be keenly observing its potential impact on Eraaya Lifespaces' future capital raising plans and overall corporate strategy.