sebi:WTM/SR/ERO/30/07/2014
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Facts / Headnote
Interim directions issued prohibiting SFL and its Directors from mobilizing funds through issue of RPS or other securities, issuing prospectuses or advertisements for soliciting money, disposing of assets, or diverting funds, pending further orders; SFL directed to provide asset inventory and reply within 21 days.
Provisions invoked
- s. 11
- s. 55A
- s. 73
- s. 4A
- s. 67(3)
- s. 67
- s. 56
- s. 73(2)
- s. 465
- s. 67(1)
- s. 67(2)
- s. 73(1)
- s. 2(36)
- s. 60
- s. 56(1)
- s. 56(3)
- s. 465(2)
- s. 73(3)
- s. 465(1)
Parties
- SFL
- Shri Abhinandan Kumar Singh
- Shri Sumanta Sinha
- Shri Neeraj Pathak
Holding
SFL's issue of 14% Cumulative Redeemable Preference Shares (RPS) to 6662 investors during FY 2011-12 was prima facie a public issue in violation of Sections 67(3), 73(1), 73(2), 73(3), 56(1), 56(3) and 60 of the Companies Act, 1956, and interim directions were issued restraining SFL and its Directors from further fund mobilization and asset disposal.
Full text
Page 2 of 13 b. Date of opening and closing of the subscription list for RPS; c. Details regarding the number of application forms circulated inviting subscription for RPS; d. Details regarding the number of applications received; e. Details regarding the number of allottees and list of such allottees; f. Number of RPS allotted and value of such allotment against each allottee's name. g. Details regarding subscription amount raised; h. Date of allotment of RPS; i. Copies of the minutes of Board/Committee meeting in which the resolution was passed for allotment; j. Date of dispatch of RPS Certificates; k. Details of the total number of applicants for each of SFL's scheme besides the list of final allottees; l. Copies of application forms, pamphlets, advertisements and other promotional material circulated for issue of RPS. m. Terms and conditions of the issue of RPS.
Page 3 of 13 4. Thereafter, SEBI vide letter dated September 9, 2013, advised SFL to submit information, viz. list of allottees of RPS (date of allotment, number of persons to whom shares were allotted, etc.) within 5 days of receipt of SEBI letter. SFL replied vide letter dated September 16, 2013, whereby it submitted the information to SEBI. Subsequently, vide letter dated September 23, 2013, SEBI sought clarification from SFL on the number of allottees of RPS and vide letter dated November 1, 2013, advised SFL to submit the audited accounts for the Financial Year 2012–13. However, till date, SFL has not responded to the aforementioned SEBI letters.
Page 4 of 13 5.2 During the Financial Year 2011-12, SFL issued 96,98,100– 14% Cumulative RPS to 6658 investors. In some cases, SFL allotted shares to more than 49 persons on a single day. Further, the Board of Directors of SFL passed multiple resolutions for the said allotment of 14% Cumulative RPS and also filed multiple numbers of Form–2. Details of the aforementioned are reproduced below –
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Source: SecMarx — sebi:WTM/SR/ERO/30/07/2014. 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.