Sebi bans former directors of 10 companies

Clamping down on illegal money pooling activities, Sebi has barred 20 former directors of 10 companies from the capital markets "till further directions".
The Securities and Exchange Board of India (Sebi) 'prima facie' found that these past directors had illegally mobilised funds from the public through the issue of securities.
The money was raised through different tools such as redeemable preference shares (RPS), non-convertible redeemable debentures (NCDs), secured redeemable debentures (SRD), and preference shares.
Since the shares were issued to more than 50 people in each case, it qualified as a public issue and requires filing of prospectus.
As per the regulation, every director of a company is responsible for the issuance of the prospectus.

In separate orders, the markets regulator said these 20 former directors were engaged in fund mobilising activity from the public, in their capacity as a director of 10 companies, through the offer of securities and as a result of such activity and has violated the provisions of the Companies Act and the Sebi Act.

Sebi has barred Sunplant Forgings's past director Ameet Singh, former director of Sunplant Constructions -- Yoganand Prasad, Ameet Singh and Girija Shankar Kumar, Sun-Plant Business' past directors -- Girija Shankar Kumar and Awdhesh Kumar Singh.
Apart from these three companies, Sebi has restrained former directors of Mangalam Agro Products, Magnox Infraprojects, MBK Business Development (India), Falkon Industries India, Rising Agrotech, Ravi Kiran Realty India and Bharat Krishi Samridhi Industries.

The markets watchdog has restrained these past directors from "accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions."
Further, they have been prohibited from "issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders."
Besides, Sebi has directed these former directors to provide a full inventory of all their assets and properties.
In case, the amount of claim is in between Rs 10 lakh and

Rs 25 lakh then Rs 13,000 along with 0.3 per cent of Rs 10 lakh will be charged if claim is filed within 6-month, Rs 39,000 plus 0.9 per cent of Rs 10 lakh if 6-month time period exceeds and after that an additional fee of Rs 6,000 per month.
If the claim amount is Rs 25 lakh, then Rs 17,500 plus 0.3 per cent of Rs 25 lakh will be charged if claim is filed within 6-month, Rs 52,500 plus 0.6 per cent of Rs 25 lakh if 6-month time period exceeds and after that an additional fee of Rs 12,000 per month.

"A client, who has a claim /counter claim up to Rs 10 lakh and files arbitration reference, will be exempted from filing the deposit," Sebi said.
Excess of filing fee over fee payable to the arbitrator, if any, to be deposited in the Investor Protection fund (IPF) of the respective stock exchange. These filing fee will be utilised to meet the fee payable to the arbitrators.
In order to ensure effective utilisation of interest income on IPF, supervision of utilisation of interest on IPF will rest with the IPF Trust, while Investor Service Committee will supervise Investor Service fund (ISF).

With an aim to ensure the adequacy of corpus of the IPF, stock exchanges and depositories will periodically review the sources of the fund and the eligible compensation amount so as to recalibrate the fund to make suitable recommendation for enhancement.
The regulator said that investor protection fund will be used to meet the legitimate investment claims of the clients of the defaulting members and promotion of investor education and investor awareness among others.
Investor Service fund will be used only for promotion of investor education and at least 50 per cent of the fund should be spent at Tier II and Tier III cities.

In the event of default by the member, all transactions executed on exchange platform will be eligible for settlement from IPF subject to the appropriate norms laid down by the defaulters' committee.
Stock exchanges, in consultation with the IPF Trust and Sebi, will review and progressively increase the amount of interim relief available against a single claim for an investor, at least every three years.
Sebi said that committee on disciplinary action, defaulters, investor services IPF Trust will have maximum of members. Independent directors will form a majority of these committees.
Stock exchanges, depositories will have to make necessary arrangements in terms of hardware -- computer, scanner, printer to facilitate the clients to convert their documents into electronic format. Such electronic format will be provided to the arbitrators along with original submissions in physical copies.