sebi:17358

SEBI · SEBI · 1995-06-22 · G. N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

SSK Fiscal Services Limited and its directors Shri Atul Kumar and Mrs Vibha Kumar debarred from accessing the capital market and to disassociate from capital market related activities for five years; public companies in which they hold controlling or substantial interest also barred from raising funds from capital market for five years

Provisions invoked

• s. 11B
• s. 11(1)
• s. 21

Parties

• SSK Fiscal Services Limited
• Shri Atul Kumar
• Mrs Vibha Kumar

Holding

SEBI directed SSK Fiscal Services Limited, found to be a vanishing company, and its directors Shri Atul Kumar and Mrs Vibha Kumar not to access the capital market for five years, and barred public companies in which they hold controlling or substantial interest from raising funds for five years.

Full text

as ‘SEBI’) in 1999 in respect of companies which raised money from the public and which are not traceable. These companies are identified as vanishing companies. Seven Task Forces for each region were also set up consisting of DCA Officers, SEBI Officers and the concerned Stock Exchange Officials to assist the CMC in identifying vanishing companies in the region and recommending the action to be taken by DCA and SEBI against such companies. 1.2 In the fifth meeting of the CMC held on 1.7.2000, the criteria for identifying vanishing companies has been laid down as under: Companies which have not complied with listing requirements / filing requirements of Stock Exchange / Registrar of Companies respectively for a period of 2 years. Where no correspondence has been received by the Exchange from the company for a long time. Where no office of the company is located at the mentioned registered office address at the time of Stock Exchange inspection. 1.3 In the fourteenth meeting of the Calcutta Task Force held on 2.4.2002, 30 identified vanishing companies were in the Eastern Region of which two were in liquidation and 19 were traceable. The remaining 9 companies were found to be non-traceable by the Task Force. This included SSK Fiscal Services Limited (hereinafter referred to as SSK). Public issue by SSK Fiscal Services Limited 2.1 SSK came out with a public issue of 20,00,000 equity shares of Rs 10/- each for cash at par through a prospectus dated 22.6.95. The issue opened on 8

under the head "Objects of the issue" that the main objects of the issue are to part finance the needs of expanding business in the area of Leasing, Hire Purchase, Bills Discounting and Investments etc., and to acquire the infrastructural facilities for expansion. 2.2 In page 10 of the prospectus, under the heading "Sources and Deployment of Funds", the following is stated: "The Company has drawn its business plan after taking into consideration the potential of different opportunities and now plans to expand its operations. The Company’s present core business is Leasing, Hire Purchase, Investment in Securities, Bills Discounting etc. It intends to expand fund-based and non-fund based activities" In the prospectus, the address of the registered office of SSK is given as 75C, Park Street, 4th Floor, Calcutta – 700 016. Shri R N Deogun, Shri Atul Kumar, Shri P K Ghosh, Mrs Vibha Kumar and Shri V S Modi are shown as directors. Their qualifications and experience are also mentioned. SSK Fiscal Services Limited – a vanishing company. 3.1 After the said public issue, the shares of SSK were listed at stock exchanges including its Regional Stock Exchange i.e., Calcutta Stock Exchange. It has been found that SSK has not been complying with various clauses of the Listing Agreement entered into by it with the Stock Exchanges viz., not submitting statutory reports, directors reports and other required reports, not furnishing financial results including Cash Flow Statements, Balance sheet

Show cause notice 4.1 In view of the above, a show cause notice dated 2.5.2000 was issued by SEBI to the SSK calling upon it to explain why action, including prohibiting SSK from accessing the capital market for a period of five years should not be taken under the SEBI Act and the Securities Contracts (Regulation) Act, 1956, specifically directions under section 11B of the SEBI Act. Similar show-cause notices were also issued by SEBI on 15.5.2000 to all the Directors of SSK. They had been given a personal hearing before the Chairman, SEBI on 26.08.2002. However the directors, their representatives or the company’s representatives have not turned up on that date. Since the company is not traceable at the address of its registered office, since none of the company’s assets are found there and no business is being carried on there and since, the company had not been complying with the listing agreement nor replying to correspondence from the exchange, the presumption is irresistible that the funds raised by the public issue have been put to uses other than those for which they were promised to be in the offer document. It is also clear that SSK is a vanishing company as per the criteria laid down by the CMC for identification of vanishing companies. Consideration of issues 5.1 In view of the fact that SSK has failed to submit any explanation to the said notice despite service of the same nor appeared before me, I conclude that they have no explanation to offer in respect of the

Source: SecMarx — sebi:17358. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.