sebi:WTM/RKA/SRO/17/2015

SEBI · SEBI · 2014-09-29 · Rajeev Kumar Agarwal, Whole Time Member

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Facts / Headnote

Held allotments of equity shares from June to August 2013 to 10,043 persons were public issues in violation of Companies Act and ICDR Regulations; directed TPSSSMFL and three directors in office at the time to jointly and severally refund money with 15% p.a. interest within three months and restrained them from accessing/dealing in securities market till refund; proceedings against deceased director abated and director appointed after allotments exonerated.

Provisions invoked

• s. 19
• s. 73
• s. 621
• s. 4A
• s. 45
• s. 67(3)
• s. 67
• s. 56
• s. 2(36)
• s. 60
• s. 73(2)
• s. 56(1)
• s. 73(1)
• s. 56(3)
• s. 42
• s. 23

Regulations

• Reg. 36
• Reg. 47
• Reg. 7
• Reg. 46
• Reg. 107
• Reg. 57
• Reg. 26
• Reg. 6
• Reg. 32
• Reg. 5
• Reg. 4(2)
• Reg. 9
• Reg. 49
• Reg. 8
• Reg. 4
• Reg. 63

Parties

• Target People Social Security Scheme Micro Finance Limited
• Mr. Mariaponnusamy Moyeeson
• Mr. Joseph Johnson Savarimuthu
• Mr. Arockiasamy Judi Gerald Paulraj
• Mr. Rayans Pillai Joshua
• Mr. Gnanapragasam

Holding

TPSSSMFL's allotments of equity shares dated June 29, 2013, July 25, 2013, August 1, 2013, August 14, 2013 and August 21, 2013 to 10,043 persons were public issues violating sections 56(1), 56(3), 60 and 73 of Companies Act, 1956 and ICDR Regulations, and TPSSSMFL with its three directors in office at the time must jointly and severally refund the money with 15% interest and remain restrained from the capital market till refund.

Full text

_________________________________________________________________________________ Order in the matter of Target People Social Security Scheme Micro Finance Limited Page 2 of 12

_________________________________________________________________________________ Order in the matter of Target People Social Security Scheme Micro Finance Limited Page 3 of 12 (i) directing TPSSSMFL and its directors to refund the money collected under the above issues to the investors with interest, (ii) directing TPSSSMFL and its directors not to issue 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 and (iii) directing TPSSSMFL and other companies, in which its directors hold substantial or controlling interest not to access the capital market for a particular period as well as to initiate prosecution proceedings under section 621 of the Companies Act, 1956.

_________________________________________________________________________________ Order in the matter of Target People Social Security Scheme Micro Finance Limited Page 4 of 12 Companies (Prospectus and allotment of Securities) Rules, 2014. TPSSSMFL, which is an NBFC, is thus entitled for the exemption under said section. Therefore, none of the aforesaid allotments can be construed as public offer and does not hit public issue guidelines. e. Since the provisions of section 42 and section 23 (1)(b) of the Companies Act, 2013 are applicable only from April 01, 2014, the allotment made by TPSSSMFL would solely be governed by the provisions of section 67 of the Companies Act, 1956. The difference in the language of the provisions of section 67 of the Companies Act, 1956 and section 42 of the Companies Act, 2013 read with Rules made hereunder is that under the Companies Act, 1956, if a company is merely a NBFC, the offer or invitation through private placement to more than 50 persons does not constitute public offer, whereas under the provisions of section 42 of the Companies Act, 2013 read with Rules, to avail the benefit of exemption, NBFC should be registered with RBI. f. Since the offer/allotment of shares by TPSSSMFL (which is a NBFC) to more than 50 persons is not a public offer within the meaning of section 67 of the Companies Act, 1956, section 60 (requirement to file Prospectus) and section 73 (application to stock exchange to list) will not be applicable to the said issu

Source: SecMarx — sebi:WTM/RKA/SRO/17/2015. 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.