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SEBI bars AM Fund Managers from collecting money from investors
Odisha-based AM Fund Managers was collecting money from investors through issue of preference shares
 
Market regulator Securities and Exchange Board of India (SEBI) asked AM Fund Managers Ltd not to mobilise funds from investors. SEBI also barred the company and its directors from issuing prospectus or any offer document or issue advertisement for soliciting money from investors for issue of securities.
 
The company was engaged in fund mobilising activity through issue of Preference Shares to more than 49 persons without complying with the provisions of the Companies Act, 1956, according to the SEBI Order.
 
SEBI had received complaints dated 3rd November and 10 November 2014 from investors alleging non-payment of their invested money by AM Fund Managers. The complainants also enclosed copies of application forms and preference share certificates.
 
SEBI started an investigation and wrote to AMF and Registrar of Companies (RoC), Cuttack, Odisha. RoC, Cuttack in its letter dated 31 December  2014 stated that the company has filed Form-2 with their office for issue of 36% Redeemable Preference Shares (RPS). The RoC also provided copies of Form-2 and list of allottees filed by the company with their office.
 
For ascertaining whether the Offer of RPS is in the nature of a public issue in accordance with Section 67 of the Companies Act, 1956, the number of subscribers is of utmost importance.  SEBI after investigation found it to be a public issue without following appropriate procedures for safeguarding the interests of investors.
 
Once it is found to be a public issue, it follows that such securities shall also have to be listed on a recognized stock exchange, as mandated under Section 73 of the Companies Act, 1956. In this regard, reference is made to Sections 73 of the Companies Act, 1956, of which sub-Sections (1), (2) and (3) are relevant for the instant case. No listing was made by the company.
 
The SEBI Order hence inferred that it prima facie appears that AMF had violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of RPS.
 
Since no prospectus was issued for the public issue, the SEBI Order inferred that prima facie, AMF had not complied with the provisions of Section 60 of Companies Act, 1956.
 
The SEBI member hence made it clear in his Order, “I am of the view that AMF is prima facie engaged in fund mobilising activity from the public, through the offer of RPS and 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).”
 
Hence the SEBI Order goes on to direct the company and its directors as follows:
(a) AMF shall not mobilize any fresh funds from investors through the offer of RPS or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions;
 
AMF, its Directors and Promoters are restrained 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;
 
(b) AMF shall provide a full inventory of all its assets and properties;
 
(c) AMF 's Directors and Promoters shall provide a full inventory of all their assets and properties;
 
(d) AMF and its promoters 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;
 
(e) AMF, its Directors and Promoters shall not divert any funds raised from public at large through the offer of RPS, which are kept in bank account(s) and/or in the custody of AMF;

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Nifty, Sensex, Bank Nifty headed higher – Weekly closing report
Nifty will weaken only on a close below 8,820
 
The S&P BSE Sensex closed the week that ended on 28th February at 29,362 (up 130 points or 0.45%), while the NSE’s CNX Nifty closed at 8,902 (up 68 points or 0.77%). In the previous week, we had mentioned that Nifty may be headed lower, if it closes below 8,750, while Bank Nifty was already in a downtrend.
 
On Monday, Nifty slipped lower in the noon session and closed at 8,755 (down 79 points or 0.89%) after hitting a five-day low. There were uncertainties about Bills being passed in the Budget session. The Prime Minister reached out to the opposition, saying the Government will listen to their views, and efforts will be made to discuss all issues of national importance.
Rating agency Standard & Poor's warned that India's weak fiscal and debt indicators, coupled with the low-income levels, "constrain" the sovereign rating.
 
On Tuesday, Nifty witnessed a highly volatile session but managed to close marginally higher. Nifty closed at 8,762 (up 7 points or 0.08%). We anticipated the market to continue witnessing a weak move. The union government said that it was hopeful that the much-delayed Goods and Services Tax (GST) bill will be passed during the ongoing budget session. The Finance Commission has suggested raising share of states in central taxes to 42% from current 32%.
 
Gold prices dipped below the Rs27,000-mark by losing another Rs100 to trade at a 10-week low of Rs26,970 per 10 gram.
 
Weakness on the Nifty continued on Wednesday. Although it opened higher in the noon session it gave up all the intra-day gain and closed marginally higher. Nifty closed at 8,767 (up 5 points or 0.06%).  
 
Rating agency Moody's Investors Service said its assessment of India's credit ratings will be determined mainly by the extent of the country's fiscal reforms, and not on recent revisions to its economic growth data. Moody's rates India at "Baa3", the lowest investment grade rating, with a "stable" outlook.
 
Much awaited railway budget did not boost up the market sentiment and Nifty moved lower. After hitting nine-day low on Thursday Nifty closed at 8,684 (down 83 points or 0.95%). Railway Minister Suresh Prabhu said the railways will invest Rs8.5 lakh crore over the next five years. Ratings agency S&P raised its India GDP growth forecast to 7.9% from 6.2% for the year ending March 2016.
 
On Friday, Nifty moved higher throughout the session and closed near the day’s high. Nifty closed at 8,845 (up 161 points or 1.85%) in anticipation of a good budget.
 
In the Economic Survey 2014-15, Finance Minister Arun Jaitley stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met.
 
The much awaited Budget for 2015-16 was welcomed with a positive opening on the Nifty. During the speech, it witnessed a highly volatile session with the benchmark giving up all the gains made at the beginning of the session. Post the budget speech, the market traded in negative but started rallying around 2 and finally closed higher. Nifty closed at 8,902 (up 57 points or 0.65%).
 
The government announced that corporate tax rate will be reduced from the current 30% to 25% over the next four years, will be defer the roll out of General Anti Avoidance Rule by two years until 1 April 2017 and increased the excise duty on cigarettes. It also proposed to merge Forward Markets Commission with Sebi, increase in service tax rate to 14% from 12% plus Education Cess. GST is to be put in place by 1 April 2016. It has abolished wealth tax and replaced it with an additional surcharge of 2% on the super-rich, with a taxable income of over Rs1 crore annually.
 
Of the 1,449 companies on the NSE, 516 companies closed in the green, 902 companies closed in the red while 31 companies closed flat.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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