sebi:WTM/SR/ERO/34/07/2014
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Facts / Headnote
Interim directions issued prohibiting SCL and its Directors from mobilizing funds, issuing offer documents, accessing the securities market, disposing of assets, or diverting funds, pending further orders.
Provisions invoked
- s. 11
- s. 81
- 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
- SCL
- Shri Awdhesh Kumar Singh
- Shri Satish Kumar Singh
- Shri Rituraj Pradhan
Holding
SCL prima facie violated Sections 56, 60 read with Section 2(36), and 73 of the Companies Act, 1956, read with Section 465 of the Companies Act, 2013, by mobilizing funds from the public through the issue of Redeemable Preference Shares (RPS) to more than 49 persons without complying with public issue requirements including listing, prospectus registration, and refund obligations. Interim directions were issued restraining SCL and its Directors from further fund mobilization and securities market activity.
Full text
Page 2 of 13 a. Copy of Prospectus/Red Herring Prospectus/Statement in lieu of Prospectus/Information Memorandum filed with Registrar of Companies (“ROC”) for issue of RPS; 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 SCL'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 d. Date of allotment of RPS – Date of allotment of RPS are 04.12.2010, 31.01.2011, 14.03.2011 and 07.11.2011. e. Date of dispatch of RPS certificates - … Company delivered cumulative RPS certificates by hand within 10 days of allotment. f. Details of the total number of applicants for each of SCL's scheme besides the list of final allottees – Company has issued Two types of Cumulative RPS on Private Placement basis. One shall carry a dividend @11% per annum only in case of 4 (Four) years option. Another one carries a dividend @12% per annum alongwith @6% Bonus at the time of Redemption in case of 7 years option. g. Copies of application forms, pamphlets, advertisements and other promotional material circulated for issue of RPS – The Company did not circulate pamphlets, advertisements and other promotional material for issue of Cumulative RPS."
Page 4 of 13 ii. The RPS were issued in accordance with inter alia the following terms and conditions – a. "The shares will be issued at ₹ 10 per share. b. The minimum no. of shares to be purchased shall be 1000 shares and thereafter in multiples of 100 shares for a period of 4 years or 7 years. c. Such shares shall carry a dividend @ 11% per annum only in case of 4 years option. When option is for 7 years, dividend payable shall be @12% per annum alongwith @6% Bonus at the time of Redemption. The dividend is payable annually in both the options. d. Purchase in the name of Minor(s) shall be accepted, only if the application form is signed by the legal/natural guardian on their behalf. e. Such shares are transferable as per the discretion of the shareholders holding such shares in the books of the company. f. Individuals, HUF, Corporate Bodies, Trusts, Minors (through Guardians), Institutions, Co-operative Bodies, etc. can apply. g. Allotment of shares shall be made within 25 days of same month, if Applications are received by 20th and if received by 30th or 31st, allotment will be within 10th of the following month. h. Redemption is possible only after the expiry of the period in both options. No bonus is payable at the time of redemption in case of 4 year option. i. All the issues are for RPS on private placement basis. So no prior approval is required from Government/RBI/SEBI or other Statutory Authorities."
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Source: SecMarx — sebi:WTM/SR/ERO/34/07/2014. 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.