sebi:CO/04/MRD/06/2004

SEBI · SEBI · 2003-12-10 · G. N. Bajpai, Chairman

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Certificate of registration of Sindhu Corporate Services Pvt. Ltd. suspended for a period of three months, effective on expiry of 3 weeks from the date of the order.

Provisions invoked

• s. 19

Regulations

• Reg. 13(2)
• Reg. 13

Parties

• Sindhu Corporate Services Pvt. Ltd.

Holding

The Registrar, Sindhu Corporate Services Pvt. Ltd., was held guilty of multiple irregularities in handling a public issue in violation of the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, and its certificate of registration was suspended for three months.

Full text

2 2.5 There were differences between date of dispatch as certified by the Registrars and actual date of dispatch of share certificates. 2.6 Shifting of records of the public issue to the corporate office of the company. 2.7 Reprint and issue of share certificates in lieu of demat credits, owing to rejection by NSDL on account of error in beneficiary account details. The Enquiry Officer recommended suspension of certificate of registration of the Registrar for a period of 3 months. 3.0 A show cause notice dated 10.12.03, in terms of regulation 13(2) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as ‘the said regulations’), was issued to the Registrar to show cause as to why the penalty as recommended by the enquiry officer should not be imposed on it. The Registrar was advised to submit its reply, if any, within 15 days of the receipt of the show cause notice. The Registrar was also asked to intimate along with the reply whether it desired a personal hearing. The Registrar vide its letter dated 26.12.03, accepted all the findings of the enquiry officer and has further stated as under: 3.1 With regard to the charge that the Registrar did not have the adequate infrastructure to discharge its functions as Registrar, it was submitted that hiring of temporary staff and outside data services bureau is an accepted mode of operation in the industry, especially in case of IPOs as the quantum and inflow of appli

3 3.4 The Registrar stated that the enquiry officer recommended the penalty of suspension of their certificate of registration for a period of three months and that the findings of the enquiry officer were limited to the work related to IPO- there is no adverse observations with regard to its functioning as Securities Transfer Agents, however the proposed penalty also seeks to suspend its STA work, which had not been found to be wanting in any respect, it was further requested that any penalty imposed by SEBI should not inadvertently penalize this branch of its work where no irregularities has been recorded. 3.5 It was submitted by the Registrar that its work comprises of continuous service to the client corporates and their investors, in such circumstances, a suspension of work for a limited period of time may not be practical to implement as the same will involve shifting of work to another Registrar for the specified duration of penalty and at the end of the penalty period, once again the work and accounts will need to be shifted back- if the clients agree to the same. The Registrar argued that on the other hand if the clients do not agree to shifting back of the accounts, it will lead to a permanent closure of its STA business, which is not the intention of the penalty recommended by the enquiry officer. 3.6 It was further submitted that the imposition of the penalty of suspension of STA work, even for a limited duration, may inadvertently result in much more harsher cons

4 Registrar’s reply in this regard is not satisfactory as the Registrar hired temporary staff and outside data service bureau, this outsourcing itself indicates that the registrar was not having adequate infrastructure to discharge as Registrar, thus I agree with the findings of the enquiry officer and hold the Registrar guilty of the above charge. 4.2 Whether there were errors in printing of discharge orders and thereby any extra refund? 4.2.1 Error in printing of discharge orders thereby excess refund was made. I find that the Registrar has specifically accepted the findings of the enquiry officer; I hold it guilty for the errors in printing of discharge orders and for excess refund. 4.3 Whether there were errors in printing of share certificates? 4.3.1 There were errors in printing of share certificates and the Registrar has in reply to the show cause notice accepted the charge. From the enquiry report, I find that the Registrar has violated SEBI’s circular no. RRTI Circular No. 1 (93-94) dated November 5, 1993 which provides that, “The Registrars should ensure that such an agreement provides for retention of issue records at least for a period of six months from the last date of despatch of letters of allotment / share certificates/refund orders to enable the investors to approach the Registrar for redressal of their complaints.” Also, the registrar has failed to abide by Clause 6 (b) of Code of Conduct as provided in Schedule III read with Regulation 13 of SEBI (Registra

Source: SecMarx — sebi:CO/04/MRD/06/2004. 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.