sebi:WTM/PS/92/NRO/MAR/2015
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Facts / Headnote
Company and its directors found guilty of contravening Sections 56, 60, 69 and 73 of the Companies Act, 1956; directed to refund money collected through NCD issuance with 15% p.a. interest compounded half-yearly; Company and present directors restrained from accessing securities market; Maini family noticees prohibited from promoting new companies pending examination of their role.
Provisions invoked
- s. 19
- s. 12(1)
- s. 73
- s. 28A
- s. 67(3)
- s. 67
- s. 117B
- s. 56
- s. 73(2)
- s. 60
- s. 117C
- s. 132
Regulations
- Reg. 7
Holding
The Company's issuance of NCDs to 744 or more allottees was held to be a public offer under the first proviso to Section 67(3) of the Companies Act, 1956, and the Company and its directors were found guilty of contravening Sections 56, 60, 69 and 73 of that Act. The Company and its directors were directed to refund all monies collected with 15% p.a. interest compounded half-yearly, and were restrained from accessing the securities market.
Full text
Page 2 of 16 2. The interim order advised the noticees to treat the same as a show cause notice to explain why appropriate action under the SEBI Act, 1992 (hereinafter referred to as 'SEBI Act') should not be taken/ issued against them for the alleged non-compliance with the provisions of the Companies Act, 1956 including Sections 56, 60, 69, 73 etc thereof. The interim order afforded opportunity to the noticees to file their reply in the matter and also for a personal hearing, if they so desired.
Page 3 of 16 d. The Company had also not submitted any material/ information indicating that the offer of NCD to 744 or more allottees from which it raised 36.30 crores in September 2012 was intended to be a private placement meant only for a specific or selected group of persons. In view of the same, the issuance of the NCDs by the Company was held to be a public offer made to fifty or more persons within the meaning of the term 'offer' made to the public under the first proviso to sub-section (3) of Section 67 of the Companies Act, 1956. e. The Company had not submitted copies of the prospectus, invitation letter or offer document through which it sought subscription from the investors, despite such information having been sought by SEBI repeatedly. The Company was mandated under Section 73 of the Companies Act, 1956 to apply for permission for listing such securities on stock exchanges. The Company failed to do so, in contravention of Section 73 of the Companies Act, 1956. The Company was also alleged to have contravened the applicable provisions of the Companies Act, 1956, including, Sections 56, 60, 69 thereof.
Page 4 of 16 d. They had no control on the acts of the new owners and management and requested to remove their names from any adverse order as may be passed against the new management of the Company.
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Source: SecMarx — sebi:WTM/PS/92/NRO/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.