sebi:WTM/PS/73/ERO/OCT/2015

SEBI · SEBI · 2015-01-28 · Prashant Saran, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Directions issued: refund of Rs. 52.79 lakhs with 15% p.a. interest compounded half-yearly, market access ban for 4 years post-refund, ban on debenture trustee for 4 years, asset inventory, public notice, and report filing requirements.

Provisions invoked

• s. 11
• s. 19
• s. 12(1)
• s. 55A
• s. 73
• s. 28A
• s. 4A
• s. 67(3)
• s. 67
• s. 117B
• s. 73(2)
• s. 73(1)
• s. 2(36)
• s. 60
• s. 67(1)
• s. 27(2)
• s. 56(1)
• s. 117C
• s. 56(3)
• s. 73(3)

Regulations

• Reg. 7
• Reg. 6
• Reg. 9
• Reg. 17
• Reg. 12
• Reg. 8
• Reg. 15
• Reg. 14
• Reg. 4(4)
• Reg. 4(2)(a)
• Reg. 19
• Reg. 26
• Reg. 16(1)
• Reg. 107
• Reg. 4(2)(b)
• Reg. 4(2)(d)
• Reg. 4(2)(c)
• Reg. 5(2)(b)

Parties

• MegasysMedi Life Limited
• Shri Manish Roy
• Shri Anil Pandey
• Shri Barun Biswas
• Shri Sandeep Kumar
• Shri Kabir Roy
• Smt. Susmita Roychoudhury
• Shri Prabir Sengupta
• Shri Tufan Kumar Pramanik
• Shri Dinesh Chandra Ghosh

Holding

MMML's offer of Secured Redeemable Debentures to 133 investors was deemed a public issue under the first proviso to Section 67(3) of the Companies Act, 1956, and the company, its directors, and the unregistered debenture trustee were held liable for violations of the Companies Act, SEBI Act, and Debt Securities Regulations, with directions to refund the money collected with interest.

Full text

Page 2 of 21 1.1 MegasysMedi Life Limited (MMML) having its office at FB–32, Deshbandhu Nagar, Baguiati, Kolkata–700059, West Bengal, India, was incorporated on June 30, 2008, with the ROC, Kolkata, West Bengal with CIN No. as U85100WB2008PLC126961. 1.2 Securities and Exchange Board of India ("SEBI") received information of alleged illegal mobilization of funds by MMML. On enquiry by SEBI, it was observed that MMML had made an offer and issued Secured Redeemable Debenture ("offer of SRDs") for Rs. 52.79 lakhs from the public. 1.3 As the above said offer of SRDs was found prima facie in violation of respective provisions of the SEBI Act, 1992 ("SEBI Act"), the Companies Act, 1956, SEBI (Issue and Listing of Debt Securities), Regulations, 2008 ("Debt Securities Regulations"), SEBI passed an interim order dated January 28, 2015 and issued

Page 3 of 21 appointed Shri Dinesh Chandra Ghosh who does not have a certificate of registration, as Debenture Trustee for the Offer of SRDs. 2.3 The above offer of SRDs and pursuant allotment were deemed public issues of securities under the first proviso to Section 67(3) of the Companies Act, 1956. Accordingly, the resultant requirement under Section 60, Section 56(1) and 56(3), Sections 73(1), (2) and (3) of the Companies Act were not complied with by MMML in respect of offers of SRDs. MMML and its directors also failed to comply with Section 117B, 117C of the Companies Act, 1956 and relevant provisions of the Debt Securities Regulations, 2008 mentioned in the interim order. Shri Dinesh Chandra Ghosh, appointed as debenture trustee had violated Section 12(1) of SEBI Act. 2.4 In view of the prima facie findings on the violations, the following directions were issued in the said interim order dated January 28, 2015with immediate effect. i. MMML shall not mobilize funds from investors through the Offer of SRDs or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions; ii. MMML and its present Directors, viz. Shri Manish Roy, Shri Anil Pandey and Shri Barun Biswas including its past Directors, viz. Shri Sandeep Kumar, Shri Kabir Roy, Smt. SusmitaRoychoudhury, Shri PrabirSengupta and Shri Tufan Kumar Pramanik, are prohibited from issuing prospectus o

Page 4 of 21 that company through the Offer of SRDs, without prior permission from SEBI; vii. MMML and its abovementioned present Directors shall not divert any funds raised from public at large through the Offer of SRDs, which are kept in bank account(s) and/or in the custody of MMML; viii. MMML and its abovementioned past and present Directors shall furnish complete and relevant information (as sought by SEBI letters dated February 3, 2014 and February 11, 2014), within 21 days from the date of receipt of this Order. ix. The Debenture Trustee, viz. Shri Dinesh Chandra Ghosh, is prohibited from continuing with his assignment as debenture trustee in respect of the Offer of SRDs of MMML and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of this

Source: SecMarx — sebi:WTM/PS/73/ERO/OCT/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.