sebi:EAD-9/VKV/NK/9857/2020-21
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Facts / Headnote
Penalty imposed on the Noticee for violation of regulations
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 28A
- s. 297
Regulations
- Reg. 13
- Reg. 200
- Reg. 60
- Reg. 2
- Reg. 64
- Reg. 64(1)
- Reg. 60(7)(a)
Parties
- Saffron Capital Advisors Pvt. Ltd
Holding
The Noticee, Saffron Capital Advisors Pvt. Ltd, as BRLM to the IPO of ATL, violated Regulation 60(7)(a) and 64(1) of ICDR Regulations and Regulation 13 read with Clauses 1, 2, 3, 4, 6, 7 and 20 of the Code of Conduct for Merchant Bankers by failing to exercise adequate due diligence regarding non-disclosure of Equastone as a related party and wrong disclosure of bridge loan utilization in the prospectus. A penalty of Rs. 5,00,000 was imposed under Section 15HB of the SEBI Act.
Full text
Page 2 of 23 a) On page 63 of the prospectus of ATL, it was disclosed that ATL has availed of a Bridge Loan facility of Rs. 20 crore from United Bank of India for meeting expenses forming part of the Objects of the Issue. The Bridge Loan was sanctioned by United Bank of India (hereinafter referred to as “UBI”) vide their letter dated 16/09/2010, and was repayable from the Issue proceeds. Further, it was disclosed in the prospectus that of the said amount, Rs. 20 crore has been utilized till 21/01/2011 as under, as certified by the statutory auditor, M/s K. Gopalakrishnan & Co, Chartered Accountants vide letter dated 24/01/2011:
Page 3 of 23 f) Equastone was a related entity of ATL / Ravikumar as wife of Ravikumar was the majority shareholder in Equastone and employees of ATL (viz. Prashanth Kumar and Madhava Reddy) were the directors in Equastone during 2010-11. The aforementioned transactions with Equastone, being a related party were not disclosed by ATL in its prospectus.
Page 4 of 23 4. In view of the abovementioned findings of the investigation, adjudication proceeding is initiated in respect of the Noticee under section 15HB of the SEBI Act.
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Source: SecMarx — sebi:EAD-9/VKV/NK/9857/2020-21. 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.