sebi:WTM/SKM/EFD1-DRA-I/21/2019-20
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Facts / Headnote
Allegations of violation of Section 12A(a),(b),(c) of SEBI Act read with Regulations 3(a),(b),(c),(d) and 4(1), 4(2)(f),(k),(r) of PFUTP Regulations found established against Noticee No. 1; violations by Noticees No. 2 to 4 also addressed; directions issued effective immediately
Provisions invoked
- s. 11B
- s. 19
- s. 12A
- s. 376
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 3(a)
Parties
- M/s. Chromatic India Limited (Noticee No. 1)
- Mr. Vinod Kumar Kaushik (Noticee No. 2)
- Mr. Vipin Sharma (Noticee No. 3)
- Mr. Ajay Sethi (Noticee No. 4)
Holding
The Company (Noticee No. 1) was held to have violated Section 12A(a),(b),(c) of the SEBI Act read with Regulations 3(a)-(d) and 4(1), 4(2)(f),(k),(r) of the PFUTP Regulations by concealing the pre-arranged Loan and Pledge Agreements that ensured full subscription of its GDR issue by a single entity (Vintage FZE), thereby misleading Indian investors. The Independent Directors (Noticees No. 3 and 4) were held to have failed in their duty of diligence in relation to the Board Resolutions that facilitated the Pledge Agreement.
Full text
Order in the matter of M/s. Chromatic India Limited Page 2 of 32 22-Oct- 2010 4.20 35.784 DBS Bank, Mumbai 3,78,00,000 (9 share each for 1 GDR) The Bank of New York Mellon Prospect Capital Ltd., London EURAM Bank, Austria Luxembourg Stock Exchange
Order in the matter of M/s. Chromatic India Limited Page 3 of 32 7. On the backdrop of the above stated facts, the Company (Noticee no. 1) and its Directors, Noticees no. 2 to 4 have been alleged to have violated provisions of SEBI Act, 1992 (hereinafter referred to as “SEBI Act”) and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”).
Order in the matter of M/s. Chromatic India Limited Page 4 of 32 violation of Article 20(2) of the Constitution of India. This results in causing agony and increasing legal cost. b) It is not allowed to inspect the original documents in violation of principles of natural justice. c) Their’s is a law-abiding company and their regulatory compliances are excellent and have no investors complaints pending against them. They have gone for the GDR issue after seeking requisite approvals and after making proper disclosures and no regulatory authority/stock exchanges have pointed out violations on their part. d) GDR were issued to expand their business and with the issue of GDR, the Company got the benefit of flow of foreign capital and listing at a global stock exchange. The GDR proceeds were utilized as per the purposes mentioned in the Offering Circular which were, (a) capital expenditures, (b) long term working capital requirement and (c) investment in proposed overseas subsidiary companies at suitable location. e) They have provided the list of seven subscribers to their GDR issue based on the information provided to them by their Lead Manager, which they believed to be true to the best of their knowledge. Further, as per secrecy laws in other jurisdictions, it was not possible for them to know the subscribers. They were shocked to know that the GDR was subscribed by only on entity (Vintage). f) The Board Resolution dated August13, 2010 merely states that GDR proceeds deposited
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Source: SecMarx — sebi:WTM/SKM/EFD1-DRA-I/21/2019-20. 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.