In re Deemed Public Issue Norms (Securities and Exchange Broad of India)
Conclusion: Offer of RPS by the company and pursuant allotment were deemed public issue of securities under the first proviso to Section 67(3) of the Companies Act, therefore, all the noticees were jointly and severally with the company forthwith refund the money collected by the Company, during their respective period of directorship, through the issuance of RPS including the application money collected from investors during their respective period of directorship, till date, pending allotment of securities, if any, with an interest of 15% per annum as the resultant requirement under Sections 56, 60, 73(1), 73(2) of the Companies Act were not complied with by OIL in respect of the Offer of RPS.
Held: Orion Industries Limited (“OIL”) was a public company incorporated on December 15, 2010. SEBI received a complaint on December 06, 2018 from a “Complainant” alleging money mobilization and enclosed copies of two certificates of Redeemable Preference Share (“RPS”). As the said Offer of RPS was found prima facie in violation of respective provisions of the SEBI Act, 1992 and the Companies Act, therefore, SEBI passed an interim order and issued directions mentioned therein against OIL and its Directors viz. Md Mahfuz Alam, Parwez Alam, Md Kamal Koshar, Mohammad Salimuddin Ansari, Manzur Alam, Punam Bharati, Mohammed Afaque Ahmad, Santanu Sen Choudhury ( “Noticees”). The Offer of RPS and pursuant allotment were deemed public issue of securities under the first proviso to Section 67(3) of the Companies Act. Accordingly, the resultant requirement under Sections 56, 60, 73(1), 73(2) of the Companies Act were not complied with by OIL in respect of the Offer of RPS. It was held that all the noticees were jointly and severally with OIL forthwith refund the money collected by the Company, during their respective period of directorship, through the issuance of RPS including the application money collected from investors during their respective period of directorship, till date, pending allotment of securities, if any, with an interest of 15% per annum, from the eighth day of collection of funds, to the investors till the date of actual payment. However, such prior repayments and interest payments to investors shall be effected only through Bank Demand Draft or Pay Order both of which should be crossed as “Non-Transferable” or through any other appropriate Banking channels, with clear identification of beneficiaries and supporting bank documents and the same shall be certified by Chartered Accountants. All the noticees were directed to provide a full inventory of all the assets and properties and details of all the bank accounts, demat accounts and holdings of mutual funds/shares/securities, if held in physical form and demat form, of the company and their own. All the noticees were prevented from selling their assets, properties and holding of mutual funds/shares/securities held by them in demat and physical form except for the sole purpose of making the refunds and deposit the proceeds in an Escrow Account opened with a nationalized Bank. Such proceeds should be utilized for the sole purpose of making refund/repayment to the investors till the full refund/repayment as directed above was made. After completing the aforesaid repayments, the noticees in their personal capacity and on behalf of the company shall file a report of such completion with SEBI, within a period of three months from the date of this order, certified by two independent peer reviewed Chartered Accountants who were in the panel of any public authority or public institution. In case of failure of noticees jointly with OIL to comply with the aforesaid applicable directions, SEBI, on the expiry of three months’ period from the date of this Order may recover such amounts, from the company and the directors liable to refund as specified in paragraph 17(a) of this Order, in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws. Noticees are directed not to, directly or indirectly, access the securities market, by issuing prospectus, offer document or advertisement soliciting money from the public and were further restrained and prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, from the date of this Order, till the expiry of 4 (four) years from the date of completion of refunds to investors as directed above. The above said directors are also restrained from associating themselves with any listed public company and any public company which intends to raise money from the public, or any intermediary registered with SEBI from the date of this Order till the expiry of 4 (four) years from the date of completion of refunds to investors. This order was without prejudice to any action that SEBI may initiate under securities laws, as deemed appropriate in respect of the above violations committed by aforesaid Directors, in accordance with law Copy of this Order shall be forwarded to all the Noticees, the recognized stock exchanges and depositories and registrar and transfer agents for information and necessary action.
Background
1. Orion Industries Limited (hereinafter referred to as “OIL”/ “the Company”) is a public company incorporated on December 15, 2010 and registered with Registrar of Companies, Jharkand with CIN: U01403JH2010PLC014555. Its registered office is at K-4, Kalpatru Jalan Road, Upeer Bazar, Ranchi, Jharkand, India –
2. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) received a complaint on December 06, 2018 from Ms. Shahjahan Begam (hereinafter referred to as “Complainant”) alleging money mobilization by The Complainant had also enclosed copies of two certificates of Redeemable Preference Share (hereinafter referred to as “RPS”) and therefore, the matter was taken up for examination as to whether the provisions of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) read with the relevant provisions of Companies Act, 1956 (hereinafter referred to as “Companies Act”) were complied with or not in the alleged issuance of RPS by the Company. On enquiry by SEBI, it was observed that OIL had issued RPS and the amount mobilized by the company are as follows:
