sebi:WTM/SR/EFD/62/09/2017
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Facts / Headnote
Maars and Shri Pravin Champalal Jain found in violation of Sections 12A(a)-(c) of SEBI Act read with Regulations 3(b)-(d) and 4(2)(c),(f),(k),(r) of PFUTP Regulations, 2003; Maars also found in violation of Section 77(2) read with 77(4) of Companies Act, 1956; Maars, Shri Harshvardhan Singh Rathore and Shri Nikunj Babulal Choradiya found in violation of Section 11C(3) of SEBI Act; SCN disposed of against Promoters and other Directors without further directions; proceedings abated against Shri T. Padmasani (deceased); warnings issued to certain entities; prohibition on accessing capital market for ten years (one entity) and one year (certain entities); prior Interim Order prohibition period to be set off.
Provisions invoked
- s. 11
- s. 19
- s. 12A
- s. 27
- s. 11C(3)
- s. 11C(5)
- s. 77(2)
- s. 77(4)
Regulations
- Reg. 11
- Reg. 3(b)
- Reg. 4(2)(c)
- Reg. 11(1)
Holding
Maars and its Managing Director Shri Pravin Champalal Jain were held liable for fraudulent and deceptive conduct in the GDR Issue of August 2007 through the Pledge Agreement with Euram that effectively financed the purchase of Maars's own shares, violating Sections 12A(a)-(c) of the SEBI Act and Regulations 3(b)-(d) and 4(2)(c),(f),(k),(r) of the PFUTP Regulations, 2003, and Section 77(2) read with 77(4) of the Companies Act, 1956. Maars, Shri Harshvardhan Singh Rathore and Shri Nikunj Babulal Choradiya were held to have violated Section 11C(3) of the SEBI Act by concealing material information from SEBI.
Full text
Page 2 of 27 “… not to issue equity shares or any other instrument convertible into equity shares or alter their capital structure in any manner till further directions.”
Page 3 of 27 Regulations, 2003 (“PFUTP Regulations, 2003”), specifically pertained to the GDR Issue made by Maars on August 10, 2007 (“GDR Issue”).
Page 4 of 27 vii. As a result of the Pledge Agreement (Maars with Euram), Maars did not have any free capital available from the abovementioned GDR Issue since the capital raised through the said Issue was provided as security against the loan taken by Vintage from Euram. However, Maars concealed this crucial information and portrayed that GDR Issue was successfully subscribed by few foreign investors thereby resulting in that company having free funds to the tune of US $17.93 million at the time of GDR Issue.
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Source: SecMarx — sebi:WTM/SR/EFD/62/09/2017. 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.