sebi:WTM/PS/83/ERO/MAR/2015
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Facts / Headnote
Directions issued: refund of Rs.2,63,94,200 with promised returns (and 15% p.a. interest compounded half-yearly in case of delay) jointly and severally against the Company and its former and present directors; market access ban for 4 years on former directors and the debenture trustee; 4-year ban on Company from accessing capital market from completion of refunds; present directors restrained from securities market if refunds not completed within 3 months; references to State Police for criminal case and to MCA for winding up.
Provisions invoked
- s. 19
- s. 12(1)
- s. 73
- s. 4A
- s. 67(3)
- s. 67
- s. 73(2)
- s. 394
- s. 73(1)
- s. 2(36)
- s. 60
- s. 67(1)
- s. 56(1)
- s. 56(3)
- s. 73(3)
Regulations
- Reg. 7
- Reg. 6
- Reg. 16
- Reg. 9
- Reg. 17
- Reg. 12
- Reg. 8
- Reg. 15
- Reg. 14
- Reg. 4(4)
- Reg. 4(2)(a)
- Reg. 19
- Reg. 26
- Reg. 4(2)(b)
- Reg. 4(2)(d)
- Reg. 4(2)(c)
- Reg. 5(2)(b)
Parties
- GSHP Realtech Limited
- Mr. Sanjay Kumar Srivastava
- Mr. Arun Kumar Singh
- Mr. Dharampal Kumar Rawat
- Mr. Mahesh Kumar Singh
- Mr. Raj Kumar Mondal
- GSHP Welfare and Development Trust
Holding
GSHP Realtech Limited made a public issue of NCDs during FY 2012-13 by allotting to 535 investors (more than 50 persons) in tranches, which was a colourable device to evade section 67(3) of the Companies Act, 1956, and the Company, its former and present directors, and the unregistered debenture trustee were held liable for contraventions of the Companies Act, SEBI Act and ILDS Regulations, with directions to refund the money collected with returns/interest.
Full text
Page 2 of 17 allotted NCDs to only 35 individuals/investors, from which it collected approximately Rs.0.24 Crores. However, for the financial year 2012–13, GSHP allotted NCDs to 535 individuals/investors under the "Offer of NCDs" and mobilized funds amounting to approximately Rs.2.64 Crores. Hence, the "Offer of NCDs" for the financial year 2012-13 was alleged to in violation of sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 ("the ILDS Regulations"). The SEBI Order also alleged that the Company had appointed GSHP Welfare and Development Trust as its debenture trustee, without it obtaining registration from SEBI in contravention of section 12(1) of the SEBI Act, 1992.
Page 3 of 17 14. ....................... 15. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against GSHP and its abovementioned Directors; its Debenture Trustee, viz. GSHP Welfare and Development Trust, in accordance with law."
Page 4 of 17 g) It would be clear from the records that the Company did not violate section 67 of the Companies Act, 1956 in any manner whatsoever. h) The findings made in the SEBI Order were not acceptable to the Company in respect of offer of NCDs. Therefore, the question of issuing a prospectus did not arise as per the provisions of section 73 of the Companies Act. i) SEBI Regulations were also not applicable in the case where the issue of securities were made to associates on a private placement. The Company requested SEBI to withdraw the SEBI Order issued against it, the directors and the debenture trustee.
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Source: SecMarx — sebi:WTM/PS/83/ERO/MAR/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.