sebi:WTM/GM/IVD/ID4/13893/2021-22
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Facts / Headnote
Rainbow Papers and Vintage found to have violated SEBI Act and PFUTP Regulations; Noticee Nos. 7, 9, 10 and 11 jointly and severally liable to disgorge Rs. 92,73,52,012 within 45 days.
Provisions invoked
- s. 12A
- s. 12
- s. 28A
- s. 376
- s. 63
Regulations
- Reg. 4
- Reg. 3
- Reg. 4(2)
- Reg. 3(a)
Holding
Rainbow Papers, in connivance with Vintage FZE, devised a fraudulent scheme whereby Vintage received GDRs without paying consideration for a substantial portion (USD 6.26 million), at the cost of Rainbow's shareholders/investors, violating Section 12A(a), (b), (c) of the SEBI Act read with Regulations 3(a)-(d) and 4(1) of the PFUTP Regulations. Noticee Nos. 7, 9, 10 and 11 (Vintage, IFCF, HBS, Aspire) are jointly and severally liable to disgorge Rs. 92,73,52,012.
Full text
Order in the Matter of GDR Issue of Rainbow Papers Limited Page 1 of 75 WTM/GM/IVD/ID4/13893/2021-22 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
Order in the Matter of GDR Issue of Rainbow Papers Limited Page 2 of 75 allegedly with the intention of defrauding Indian investors. During the course of such investigation, it came to SEBI’s knowledge that there were several other GDR issues wherein loan was taken by a foreign entity and the security of the loan was provided by the GDR issuing company by signing a pledge agreement. One such company was Rainbow Papers Limited (“Rainbow”/ “the Company”). 1.2. The focus of the investigation was to ascertain whether the shares underlying the GDRs were issued with proper consideration and whether appropriate disclosures, if any, were made by Rainbow with respect to GDRs issued by it on January 27,
Order in the Matter of GDR Issue of Rainbow Papers Limited Page 3 of 75 Bank for subscribing to the GDRs of Rainbow. Noticee No. 3, Radheshyam Goenka and Noticee No. 4, Sangeeta Goenka were Directors on the Board of Rainbow, and had certified the copy of the board resolution in respect of the board meeting dated November 27, 2009, which authorized Ajay Goenka to sign the Pledge Agreement allowing EURAM bank to use the GDR proceeds credited in the bank account as security for the loan availed by Vintage. Noticee No. 5, Arun Panchariya signed the Loan Agreement on behalf of Vintage for the subscription of GDRs of the Company. Arun Panchariya was Managing Director and beneficial owner of Vintage. B. Noticee No. 9, India Focus Cardinal Fund (“IFCF”) was a sub-account of FII EURAM Bank. Arun Panchariya was the beneficial owner of IFCF, i.e., Noticee No.9. Highblue Sky Emerging Market Fund (“HBS”/ “Noticee No. 10”) was registered as a sub-account of FII Golden Cliff (also known as Vaibhav Investment Ltd.). Arun Panchariya connected entities were beneficial owners and directors of Highblue Sky Emerging Market Fund. FII sub-accounts India Focus Cardinal Fund and Highblue Sky Emerging Market Fund received GDRs, converted them and sold the converted equity shares of Rainbow in the Indian stock exchanges. Aspire Emerging Fund (“Aspire”/ “Noticee No.11”) and Sparrow Asia Diversified Opportunities Fund (“Sparrow”/ “Noticee No.12”) were also sub accounts connected to Arun Panchariya who re
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Source: SecMarx — sebi:WTM/GM/IVD/ID4/13893/2021-22. 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.