sebi:WTM/MPB/DDHS/145/2020

SEBI · SEBI · 2019-12-17 · Madhabi Puri Buch, Whole Time Member

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Show cause notice disposed of without imposition of any penalty

Provisions invoked

• s. 15
• s. 19
• s. 11(1)
• s. 15H
• s. 263(1)

Regulations relied on

• SEBI (Debt Securities) Regulations, 2008

Parties

• Oxyzo Financial Services Private Limited

Holding

The AO's interpretation that clause 4(c) of SEBI circular IMD/DF/17/2011 requires net worth of Rs. 100 crore only at the time of listing (not issuance) was held erroneous to the extent it is not in the interest of the securities market, and the net worth requirement triggers at the time of issuance; however, the Noticee was ultimately not held liable because its conditional listing clause did not constitute a clear intention to list, so it did not fall within the definition of 'issuer' under Regulation 2(1)(g) of ILDS Regulations, 2008.

Full text

Order in the matter of Oxyzo Financial Services Private Limited Page 2 of 25 Listing of Debt Securities) Regulations, 2008 (in short ILDS Regulations, 2008) read with clause 2(i) of Uniform Listing Agreement.

Order in the matter of Oxyzo Financial Services Private Limited Page 3 of 25 unlisted at issuance uptill 90 days of Noticee attaining Rs. 100 Cr networth, 2) the said circular talks about criteria at the time of listing and that Noticee has complied with this criterion at the time of seeking listing on May 18, 2019, 3) Noticee had attained net worth of Rs.100 crore on March 22, 2019, 4) Noticee misinterpreted inadvertently that Noticee needed to comply with Net worth criteria at the time of Listing only and 5) that it has redeemed the said MLDs and returned the money to the said investor with penal interest in terms of the termsheet. b) As regards, the allegation of OD and contentions of Noticee, the question before me is whether the Noticee needed to comply with clause 4(c) of the said circular at the time of issuance and not just at the time of listing. As regards, the other two violation provisions mentioned in the SCN, I note that clause 2(i) of Uniform Listing Agreement binds the issuer company to comply with relevant byelaws / regulations / circulars / notices / guidelines issued by the stock exchange from time to time, and that regulation 20(2) of ILDS Regulations, 2008 is binding upon the issuer to comply with conditions of listing of such debt securities as specified in the Listing Agreement with the stock exchange where such debt securities are sought to be listed. These are both triggered chronologically after securities are issued and in the instant matter at the

Order in the matter of Oxyzo Financial Services Private Limited Page 4 of 25 the applicability of ILDS Regulations, 2008. It is imperative to refer to regulation 3 of ILDS Regulations, 2008, which specifies the applicability of said Regulations, states that, “These regulations shall apply to- (a) public issue of debt securities; and listing of debt securities issued through public issue or on private placement basis on recognized stock exchange”. Literal reading of regulation 3(1)(a) of ILDS Regulations, 2008 shows that the said regulation is applicable for public issue of debt securities and regulation 3(1)(b) ILDS Regulations, 2008 is for listing of debt securities issued through public issue and private placement. Further, as per definition of public issue as prescribed under regulation 2(1)(i) of ILDS Regulations, 2008 “public issue means an offer or invitation by an issuer to public to subscribe to the debt securities which is not in the nature of a private placement”. In view of the above, it is noted that applicability of ILDS Regulation,2008 as prescribed under regulation 3(1)(a) of ILDS Regulation, 2008 is only for public issue of debt securities and not for private placement. I note that while the subject of the said SEBI circular which is issued under enabling clause 31(2)(c) of ILDS Regulations, 2008 for listing conditions states, “Guidelines for Issue and Listing of Structured/Market Linked Debentures”, the clause 4 specifically mentions about various conditions

Source: SecMarx — sebi:WTM/MPB/DDHS/145/2020. 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.