sebi:WTM/SM/IVD/ID7/8825/2020-21
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Facts / Headnote
Preferential allotment dated March 20, 2012 held to be a deemed public issue to more than 49 persons; violations established against Noticee nos. 1 to 7; proceedings against Noticee nos. 8 and 9 disposed of without direction on benefit of doubt; restraint/freeze directions indicated but full operative directions not in excerpt.
Provisions invoked
- s. 19
- s. 4A
- s. 108
- s. 67(3)
- s. 67
- s. 58
- s. 56
- s. 67(1)
- s. 60
Regulations
- Reg. 5
- Reg. 57
- Reg. 76
- Reg. 77
- Reg. 6
- Reg. 51A
- Reg. 46
- Reg. 78(2)
- Reg. 5(1)
- Reg. 6(4)
Holding
The preferential allotment of 1,30,00,000 shares on March 20, 2012 by Noticee no. 1 to more than 49 persons was a deemed public issue in breach of proviso to Section 67(3) of Companies Act, 1956, violating Sections 56, 60 and ICDR Regulations 6, 46 and 57, with additional violation of Regulation 77(1) for receipt of consideration after allotment; charges established against Noticee nos. 1 to 7, while Noticee nos. 8 and 9 were exonerated.
Full text
Order in the matter of Kelvin Fincap Limited Page 2 of 47 from accessing the securities market and were further prohibited from buying, selling or dealing in securities market, either directly or indirectly, till further directions. The said 44 entities also included Noticee nos. 1 to 6 and Noticee no. 9 of the present proceedings. The aforesaid directions passed vide interim order were confirmed vide
Order in the matter of Kelvin Fincap Limited Page 3 of 47 wherein shares were allotted in joint names, only in 01 instance, the claim of joint allotment of shares was noticed to be genuine. vii. It was also observed that another set of (04) entities, who were not shown as initial allottees by the Company, were also having shares in their names issued on the date of allotment itself, i.e., March 20, 2012. The RTA had claimed that these four persons/shareholders had bought shares basically from another set of two persons who were shown and disclosed as the original allottees and it was because of subsequent transfer of shares from those two person, the number of shareholders became four (04) as stated above. viii. In the above background, the total number of allottees to whom shares were allotted by the Company were noticed to be more than number 49, as against the claim of having been allotted to 49 entities only. ix. Further, the investigation also revealed that with respect to certain allottees, the payment was received by the Company even before the date of EGM wherein the approval for preferential allotment was granted by the Board of Directors. And in few cases, the allottees submitted that they had paid money to the Noticee no. 6, which was connected to the Noticee no. 1, while Noticee no. 7 (ex-Director of Noticee no. 6) was dealing with the RTA on behalf of both Noticee no. 1 as well as Noticee no. 6. x. The Noticee nos. 8 & 9 were the authorised signatories on behalf
Order in the matter of Kelvin Fincap Limited Page 4 of 47 xiv. In view of the aforesaid, the Noticee no. 1 to 9 have violated Sections 56, 60 read with 67 (3) of Companies Act, 1956 and Regulation 5 (1), 6, 7, 25, 46 and 57 of ICDR Regulations. xv. Further, in the process of said allotment, the Noticee no.1 has allotted shares to six entities against which, payment was received by it after the date of allotment (March 20, 2012). The said act on part of the Noticee no. 1 is in violation of Regulation 77 (1) of ICDR Regulations. Also, the Company had received payment from certain entities for preferential allotment before conducting the EGM wherein the said preferential allotment was approved by the Board of the Company
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Source: SecMarx — sebi:WTM/SM/IVD/ID7/8825/2020-21. 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.