sebi:WTM/KMA/IVD/410/07/2011
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Facts / Headnote
Show cause notice disposed of without any directions (benefit of doubt given)
Provisions invoked
- s. 19
Regulations
- Reg. 11
- Reg. 6(a)
Parties
- Coverage and Consultants Limited
Holding
The Whole Time Member disposed of the show cause notice dated April 25, 2005 issued to Coverage and Consultants Limited in the matter of Accurate Exports Limited, without any directions, granting the entity the benefit of doubt.
Full text
Page 2 of 5 Meeting (EGM) on April 30, 2001. The following proposals were made in the first notice: i. An increase in authorised capital from `25 crores to `156 crores, divided into 15.60 crore equity shares of `10 each ii. To issue 15.60 crore preferential shares on a swap basis in proportion to 10 shares of the Company for every one share held by the shareholders of Sanidhya Holiday Resorts and Estate Developers Limited and Tissue and Floritac India Limited. iii. Resolution to invest in the equity shares of Sanidhya Holiday Resorts and Estate Developers Limited and Tissue and Floritac India Limited on swap basis to acquire total shareholding in the said companies and iv. Shifting of registered office of the Company from Ahmedabad to Vadodara.
Page 3 of 5 they in turn, transferred the shares to other set of entities who offloaded the same in the market, without being listed on the stock exchange. It was alleged that the entity had traded through the stock broker, Equisearch Broking Private Limited and Active Finstock Private Limited (through its sub-broker Pinnacle Finstock). It was stated in the notice that the entity had purchased 88,81,050 shares and sold 93,72,965 shares through the stock brokers and that the shares purchased by almost all the clients during the period through the stock broker, Equisearch Broking Private Limited were found to have been transferred to the account of the entity from the personal account of the said stock broker. The notice mentioned the details of the trades of the entity done through Equisearch Broking Private Limited. The notice also mentioned that since the shares could not be sold, they were transferred to various entities including Mr. Rajesh C Talsania, Shri Parshwa Finance and Gautam Jhaveri. The notice alleged that the entity had colluded with various persons to offload shares that were fraudulently issued and dematerialized by the Company in excess of its authorized capital, in violation of Regulation 6(a) of the PFUTP Regulations.
Page 4 of 5 4,82,72,751 shares to Nokia Finance International Private Limited (Nokia Finance), which was transferred to various other entities. In this regard, the entity has submitted that it received the shares of the Company in demat mode from Nokia Finance and that since the shares were in demat mode, it had considered them to be safe to deal. It had sold shares in demat mode and returned the balance shares back to Nokia Finance. It is the entity’s submission that it did transactions in the shares of the Company in good faith and in a bonafide manner as was permissible. The entity contended that its dealing was in the normal course and its trading did not have any co-relation with the issue of capital by the Company. According to it, its transactions were through registered stock brokers in compliance with the bye-laws of the stock exchange and there was no complaint. The entity submitted that it did not collude with any party to offload shares that were allegedly fraudulently issued and dematerialized by the Company in excess of its authorized capital and that it was not aware about any such alleged wrongdoing by the Company. It was the submission that to the best of its knowledge no stock exchange declared any alleged shares of the Company that was allegedly fraudulently issued and dematerialized as bad delivery or taken any penal action against any stock broker who delivered such alleged shares in demat form. The entity further stated that there were no specific
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Source: SecMarx — sebi:WTM/KMA/IVD/410/07/2011. 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.