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SEBI restrains Suvidha Land Developers from mobilising funds from investors
SEBI said Suvidha Land Developers collected Rs2.16 crore from investors by issuing preference shares during 2013-14
 
Market regulator Securities and Exchange Board of India (SEBI) has asked Suvidha Land Developers India Ltd not to mobilise any fresh funds from investors.  Further, the company and its directors are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities.
 
The company was engaged in fund mobilising activity through issue of RPSs to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and SEBI (Issue and Listing of Non-Convertible Redeemable Preference shares) Regulations, 2013, according to the SEBI Order.
 
SEBI received a complaint on 7 October 2013 alleging that Suvidha group has been mobilising money from public. The complainant provided certain documents in respect of Suvidha Land Developers  and its group company Suvidha Farming and Allied Ltd and requested for investigation by SEBI. The case of Suvidha Farming and Allied Ltd is being examined separately by SEBI from the perspective of collective investment scheme (CIS).
 
SEBI, in the course of its investigation, found that SLDIL was incorporated on 14 September 2010 with CIN U45201MP2010PLC024330, having its registered office at House No. 176, Near Habibganj, Behind Railway Track, Narayan Nagar, Hushangabad Road, Bhopal, Madhya Pradesh-462026. The corporate office of SLDIL is at G-13, Sector 6, Noida (Uttar Pradesh)-201301. The Directors of SLDIL are Vinod Kumar Shankhwar,  Rajendra Karn Rajpoot, and  Rajneesh Dutta.
 
As per the investor data provided by SLDIL, applications were received from June 2013 onwards and the investors were largely people of various villages from the states of Madhya Pradesh, Uttar Pradesh and Chhattisgarh.  As per the unaudited provisional balance sheet as on 31 January 2014 provided by SLDIL, the company had mobilised an amount of Rs2.16 crore through issuance of preference shares during 2013-14.
 
Based on its findings, SEBI observes, “In the facts of the instant case, it is observed from the details of allotment submitted by SLDIL, that SLDIL issued and allotted Cumulative Redeemable Preference Shares in series of allotments and raised an amount of approximately Rs2.16 crore from 1,137 investors during the financial year 2013-14. It is pertinent to mention that for a single issue of preference shares, allotment was made on fifteen occasions and out of this on ten occasions Cumulative Redeemable Preference Shares was issued to more than fifty investors.”
SEBI hence argues, “it will follow that since the Offer of RPS is a public issue of securities, such securities shall also have to be listed on a recognised stock exchange, as mandated under Section 73 of the Companies Act, 1956.” SLDIL has not listed the shares in any stock exchange in the country.
 
SEBI also found that SLDIL has prima facie not complied with the provisions of Section 60 of the Companies Act, 1956, by not making a public offer through filing of prospectus.
 
Finding the activity of the company to be merely a fund mobilising activity, SEBI observes, “I am of the view that SLDIL is prima facie engaged in fund mobilising activity from the public, through the Offer of Rostand as a result of the aforesaid activity has violated the aforementioned provisions of the Companies Act, 1956 (Section 56, Section 60 read with Section 2(36), Section 73) and the SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013.”
 
SEBI, in its Order, has strictly prohibited the company and its promoters from further fund mobilising activity and the issue of RPS. As for the existing funds of the company, the SEBI Order says, “SLDIL shall provide a full inventory of all its assets and properties; the Directors of SLDIL shall provide a full inventory of all their assets and properties;  SLDIL and its abovementioned Directors shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company through the Offer of RPS, without prior permission from SEBI.”
 
In its concluding remarks, the SEBI Order says, “This Order is without prejudice to the right of SEBI to take any other action that may be initiated against SLDIL and its abovementioned Directors, in accordance with law.”
 

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