Regulations
SEBI bars Unique Vision Financial Advisory from any activity in the securities market
This SEBI Order is to  prevent  Unique  Vision Financial Advisory from soliciting  and  collecting  funds  from  the  investors  and  carrying  on  portfolio  management services without due registration from SEBI
 
Market regulator Securities and Exchange Board of India (SEBI), has passed an order dated 22 July 2015 against Unique Vision Financial Advisory Pvt. Ltd. (UVFAPL) and its directors/promoters,  Chandrakant Shamrao Dhole and  Ravindra Shankar Kaurav under sections 11, 11(4), 11B and 11D of SEBI Act, 1992 prohibiting the entities from buying, selling or otherwise dealing in the securities market, either directly or indirectly.
 
Also, the SEBI Order directed UVFAPL to expeditiously return the monies received from its clients along with the promised returns, in respect of its unregistered portfolio manager activities and submit a certificate from a peer reviewed Chartered Accountant, within a period of 3 months.
 
SEBI had already issued an interim order on 29 January 2015 to suspend its portfolio management activities. The  interim  order  observed  that  UVFAPL  was offering portfolio management services to its clients without obtaining registration from SEBI as portfolio manager in contravention of  Section 12(1) of the  Securities and Exchange Board of India Act, 1992 ('SEBI Act')  read with SEBI (Portfolio Managers) Regulations, 1993 ('PMS Regulations').
 
Before proceeding further with the matter after the interim order, an opportunity of personal hearing was afforded to the noticees on 17 April 2015, when the noticees namely  Chandrakant Shamrao Dhole and  Ravindra  Shankar  Kaurav  appeared  for  themselves  and  for  the  company  and reiterated the submissions made in the reply.  UVFAPL also submitted a 'compact disc' containing the details of the bank accounts of the company. UVFAPL also requested for one week's time for submitting the written submissions which was duly granted. UVFAPL in its email dated 24 April 2015, requested for an extension till 5 May 2015, for submitting the written submissions and the bank statements.  In another email dated 9 May 09 2015, the notices requested for further extension till 18 May 2015. UVFAPL  in its  letter  dated  19 May  2015,  submitted  that  he  had collected  Rs1,84,60,000 from the investors and had returned  Rs1,35,87,636 to  investors  in the form of monthly return. UVFAPL also requested SEBI to consider the said payment as a payment  of  principle amount  collected  from  the  investors  and  agreed  to  pay  the  remaining amount  i.e.  Rs48,72,364  to  the  investors,  for  which UVFAPL  requested  for  additional  time.  Along with this letter, UVFAPL also filed the bank statements of the company with ICICI Bank and IDBI Bank.  UVFAPL, in its letter dated 11 June 2015, submitted the details of amount returned to the investors through bank and in cash. However, the  details  submitted  for  cash  payments,  were  not  supported  by  any  acknowledgement/ receipt/ confirmation from the investors.
 
The SEBI Order observed, “It is noted that UVFAPL has not disputed the allegations made in the interim order rather the allegations have been admitted. The submission of UVFAPL is that the money collected was used in the 'stock market' and 'international forex market', wherein, losses were incurred.  UVFAPL has admitted rotating the money of the investors.”
 
The SEBI Order also observed, “UVFAPL  has  claimed  that  a  sum  of  Rs1,35,87,636  had  been  repaid  to  the investors.  However,  it  is  noted  that  there  are  several  investor  complaints  alleging  that  post-dated cheques issued by the company had returned with the reason 'insufficient funds'.”
 
Hence, the SEBI final order (after the interim order) has no lenience for UVFAPL on account of the personal hearing and documents submitted. The SEBI Order said, “SEBI may also initiate Adjudication proceedings under Chapter VIA of the SEBI Act against UVFAPL and  its  promoters/  directors for the violation of indulging in  unregistered  portfolio management  services  in  the  securities  market  in  breach  of  Section 12(1) of the SEBI Act and Regulation 3 of the SEBI (Portfolio Managers) Regulations, 1993. This Order shall come into force with immediate effect. Copies  of  this  Order  shall  be  served  on  recognised  stock  exchanges  and  depositories  for information and necessary action.”

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SEBI directs Swasata Cements to cease to mobilise any fresh funds from investors
Swasata Cements was engaged in fund mobilising activity through issue of NCDs to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and SEBI (Issue and Listing of Debt Securities), Regulations, 2008, says a SEBI Order
 
Market regulator SEBI (Securities and Exchange Board of India) has directed that Swasata Cements Limited (SCL) shall forthwith cease to mobilise any fresh funds from investors through the Offer of Non-Convertible Redeemable Debentures (NCDs) or through the issuance of equity shares or any other securities, to the public and/or invite subscription. SCL, and its directors, is prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, according to the SEBI Order.
 
SCL, and its directors, shall not dispose of any of the properties or alienate or encumber any of the assets owned/acquired by that company without prior permission from SEBI, says the SEBI Order.
 
SCL was engaged in fund mobilising activity through issue of NCDs to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956 and SEBI (Issue and Listing of Debt Securities), Regulations, 2008.
 
The SEBI Order is an Interim Order cum Show Cause Notice.
 
SEBI, during the course of investigations in the matter of SCL Steel Corporation Limited came to know that one of their group companies, SCL had also raised money by issue of debentures during 2008-10. One of the directors of SCL Steel Corporation Limited, Avijit Chakraborty, undertook to submit the complete date-wise details of money raised with names and addresses of investors, along with number of debentures allotted, to SEBI.  Subsequently, SCL Steel Corporation Limited in its letter dated January 19, 2015 submitted copies of audit reports from 2008-09 to 2012-13 and list of debenture holders of SCL. In the meanwhile, SEBI received a complaint on 23 January 2015 alleging non-payment of maturity amount by SCL and its other group entities. In respect of SCL, the complainant provided copies of Debenture Certificate no.13347 issued by SCL to an investor for 20 debentures of Rs100 each, post-dated cheque issued by SCL to the investor, and a brochure for “Advance Cement Booking” Scheme. Hence, SEBI began its investigation on SCL. The basis of initial investigation was the correspondence exchanged between SEBI, SCL Steel Corporation Limited and its directors, complaint received and documents contained and information/documents obtained from the Ministry of Corporate Affairs' website i.e. 'MCA 21 Portal'.
 
The SEBI Order observes, “SCL had issued and allotted Non-Convertible Redeemable Debentures (Offer of NCDs) to approximately 11,013 investors during the financial years 2008-09 and 2009-10 and mobilized an amount of Rs6,63,93,184/-.
 
SEBI points out that for ascertaining whether the Offer of NCDs is a public issue or an issue on private placement basis, in accordance with Section 67 of the Companies Act, 1956, the number of subscribers is of utmost importance. SCL is also not stated to be a non-banking financial company or a public financial institution within the meaning of Section 4A of the Companies Act and therefore, is not covered under the second proviso to Section 67(3).
 
Hence SEBI found out that SCL had done a public issue of NCDs. It will follow that since the Offer of NCDs 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. In this regard, reference is made to Sections 73 of the Companies Act, 1956, of which sub-Sections (1), (2) and (3) are relevant, points out the SEBI Order.
 
In the facts of the case, it prima facie appears that SCL has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of NCDs. Under Section 2(36) read with Section 60 of the Companies Act, 1956, a company needs to register its prospectus with the RoC (Registrar of Companies), before making a public offer or issuing the prospectus.
 
The SEBI Order infers that SCL is prima facie engaged in fund mobilising activity from the public, through the Offer of NCDs and as a result of the activity has violated the provisions of the  Companies Act, 1956 (Section 56, Section 60 read with Section 2(36), Section 73, Section 117B, Section 117C) and the Debt Securities Regulations.
 
Hence SEBI has restrained SCL and also sought more information from SCL.
 
The SEBI Order concludes by saying that this interim order cum show cause notice is without prejudice to the right of SEBI to take any other action that may be initiated against SCL and its directors in accordance with law.

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