J & N Barred From Capital Markets For 2 Years

The Securities and Exchange Board of India (Sebi) has directed Jenson and Nicholson (J&N) not to access the capital market through a rights and public issue for the next two years.

This is for the first time that the capital market watchdog has acted against a corporate for not fulfilling its commitments.

According to a Sebi release, J&N had made a rights issue which closed on October 11,1996.

The markets regulator received a complaint stating that the company had, after completing the allotment and despatching the share certificates, cancelled the rights issue.

According to Sebi officials, no company is allowed to cancel the rights issue after completing all formalities pertaining to the issue.

 

After giving a personal hearing to the representatives of the company and considering the submissions made, Sebi has concluded that the issuer company, by its unilateral decision to cancel the rights issue, has tampered with the issue process and thereby adversely affected the interest of investors and orderly development of the market. Hence the regulator's fiat.

Sebi had earlier show caused J&N earlier under section 11b of the Sebi Act stating that why the company should not be debarred from accessing the capital market by a rights or public issue for a period of five years.

Market watchers say that the move will set a new precedent wherein companies not meeting their commitments would face touch action from the markets regulator.