Sebi bans Sanket Investments, three directors from market

Sebi today barred Sanket Investments and Marketing Ltd as well as its three directors from the securities markets for violating public issue norms.
Along with the company, the three directors who have been banned till further orders are Prashanta Kumar Dash, Pravat Kumar Dash and Nibedita.
While restraining them, the regulator said the company frequently repeated the pattern of making preferential allotment of shares to over 49 persons.
This was done "15 times during a short span of four months", which appears to have been done solely for the purpose of avoiding regulatory compliances, the watchdog said.
The city-based Sanket Investments, a Non Banking Finance Company (NBFC), raised Rs 5.81 crore by issuing redeemable cumulative preference shares (RCPS) to 698 persons.

These allotments were made during the period from October 2011 to February 2012.

While NBFCs are permitted to issue shares to more than 49 persons without the requirement of public announcement, Sebi said Sanket Investments made the allotments prior to February 2012 -- when it was registered as an NBFC.
As a result, the company was not allowed to make such issuance before February 2012.
In his order, Sebi Whole Time Member G Mahalingam said the allotment prima facie is a public issue in accordance with the provisions of the Companies Act.
These entities have been barred from accessing the "securities market or buy, sell or otherwise deal in the securities market, either directly or indirectly, or associate themselves with any listed company or company intending to raise money from the public".

They have also been prohibited from diverting any fund raised from public through the offer and allotment of preference shares.
The matter concerning Sanket Investments was referred to Sebi by the Registrar of Companies in November 2015. There were complaints of non-payment of interest on the redeemable preference shares issued by the company.