sebi:WTM/SM/IVD/IVD4/9474/2020-21
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Facts / Headnote
Violations established against Noticee No.1 (Company) and Noticee Nos.2 to 4 with restraint directions and freezing of existing holdings; proceedings against Noticee No.5 disposed of without any direction
Provisions invoked
- s. 19
- s. 12A
- s. 41
- s. 65
- s. 77(2)
- s. 376
- s. 149(12)
- s. 149
- s. 63
Regulations
- Reg. 3
- Reg. 3(a)
Parties
- Beckons Industries Ltd.
- Gurmeet Singh
- I. S. Sukhija
- Chandra Prakash
Holding
Beckons Industries Ltd. and its directors Noticee Nos.2 to 4 violated Section 12A of the SEBI Act and PFUTP Regulations by facilitating Vintage FZE's subscription to the entire 2.49 million GDR issue of June 14, 2010 through a Euram Bank loan secured by pledged GDR proceeds and concealing that arrangement; allegations against Noticee No.5 were held not sustainable.
Full text
Order in the matter of Beckons Industries Ltd. Page 2 of 45 Table no. 1 GDR issue date No. of GDRs Issued (mn.) Capital raised (US$ mn.) Local custodian No. of equity shares underlying GDRs Global Depository Bank Lead Manager Bank where GDR proceeds deposited GDRs listed on 14- June- 2010 2.49
Order in the matter of Beckons Industries Ltd. Page 3 of 45 proceeds of the Company as security against loans if any. During the course of investigation, it was also noticed that the Company had not disclosed to the investors about the arrangement so made by it to ensure the successful issuance/subscription/allotment of the GDR by facilitating a loan to Vintage in terms of the aforesaid Loan Agreement. It was concealed from the public that the proceeds of GDR would be kept as security with the Euram Bank and would not be made available for the Company’s immediate use. Thus, the Company had concealed material facts from shareholders of the Company and investors of Securities Market and thereby had prevented them from taking an informed decision. The above acts of providing partial and distorted information to the public about issuance of GDR by the Company were observed to acts falling in the category of fraudulent acts on the part of the Noticees to mislead the shareholders/investors at large. SHOW CAUSE NOTICE, REPLY AND HEARING:
Order in the matter of Beckons Industries Ltd. Page 4 of 45 no. 2, 3 and 5 have submitted their written replies to the SCN. While the said proceedings were in progress, an application for Settlement was preferred by the Noticee no. 2, which finally got rejected on April 17, 2020. Meanwhile, in compliance with the principles of natural justice, Noticees were provided with an opportunity of personal hearing on November 15, 2018, however, upon receipt of request from certain Noticees, the hearing was adjourned to March 26, 2019. I further note that on the basis of requests received from Noticee no. 2, 3 and 5 citing health issues, personal issues and COVID pandemic, etc. from time to time, the personal hearing was adjourned several times and finally the Noticees were heard on July 14, 2020. After completion of their personal hearing, Noticees no. 2 and 5 (vide separate letters dated July 27, 2020) and Noticee no. 3 (vide letter dated July 29, 2020) have also submitted their respective post hearing written submissions.
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Source: SecMarx — sebi:WTM/SM/IVD/IVD4/9474/2020-21. 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.