sebi:WTM/PS/30/ERO/AUGUST/2015
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Facts / Headnote
Refund with 15% interest directed with market-access and association bar till four years after completion of refunds
Provisions invoked
- s. 19
- s. 55A
- s. 73
- s. 28A
- s. 4A
- s. 67(3)
- s. 67
- s. 73(2)
- s. 73(1)
- s. 2(36)
- s. 60
- s. 67(1)
- s. 56(1)
- s. 56(3)
- s. 73(3)
- s. 67(2)
- s. 56(4)
Regulations
- Reg. 107
Parties
- Rising Agrotech Limited
- Shri Siddhartha Kayal
- Shri Dipan Kumar Sen
- Shri Sushovan Roy
- Shri Bikash Bhandary
Holding
RAL's offers of preference shares to 564 persons raising Rs. 94.27 lakhs in 2011-12 and to 432 persons raising Rs. 40.93 lakhs in 2012-13 were deemed public issues violating Sections 56, 60 and 73 of the Companies Act, 1956. RAL and its four directors were directed to forthwith refund with promised returns / 15% interest and were restrained from the securities market till four years after completion of refunds.
Full text
Page 2 of 13 13 and raised Rs. 40.93 lakhs. The said Offer of Preference Shares and pursuant allotment was a deemed public issue of securities under the first proviso to Section 67(3) of the Companies Act, 1956, Accordingly, the resultant requirement under Sections 60, 56(1), 56(3), 73(1) (2) (3) of the Companies Act,1956 were not complied with by RAL. 2.2 In view of the prima facie findings on the violations, the following directions were issued in the said interim order dated September 9, 2014 with immediate effect. i. RAL shall not mobilize funds from investors through the Offer of Preference Shares or through any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly, till further orders; ii. RAL and its present Directors, viz. Shri Siddhartha Kayal, , Shri Sushovan Roy and Shri Bikash Bhandary, along with its past Director, Shri Dipan Kumar Sen are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders; iii. RAL and its abovementioned Directors, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions. iv. RAL shall provide a full inventory of all its assets and properties; v. RAL and its abovementioned pres
Page 3 of 13 3.1 Vide the said interim order RAL and its abovementioned Directors were given the opportunity to file their reply, within 21 days from the date of receipt of the said interim
Page 4 of 13 and other materials on record. The company and the directors have not disputed the said issuance by any oral or written representations. 6.2 I have also perused the documents/ information obtained from the 'MCA 21 Portal', other documents filed before the Registrar of Companies. The perusal of Form 2 filed pursuant to the allotment dated September 23, 2011, December 05, 2011, January 05, 2012, March 16, 2012 and March 31, 2012, show that RAL made an Offer of Preference Shares to 564 persons and raised Rs. 94.27 lakhs in the year 2011-12 and the perusal of Form 2 filed pursuant to the allotment dated May 31, 2012 and July 17, 2012 shows that RAL made an Offer of Preference Shares to 432 persons and raised Rs. 40.93 lakhs in 2012-13. Thus, a total of Rs. 135.20 lakhs has been collected as on 2012-2013. 7.1 If so, whether the said issues are in violation of Section 60, Section 56(1) and 56(3), Sections 73(1) (2) (3) of the Companies Act,1956?: The provisions alleged to have been violated and mentioned in Issue No.2 are applicable to the offer made to the public. Therefore, the primary question that arises for consideration is whether the issuances of preference shares covered in Issue No 1 are public issue. At this juncture, reference may be made to section 67(1) & (3) of the Companies Act, 1956:
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Source: SecMarx — sebi:WTM/PS/30/ERO/AUGUST/2015. 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.