ATM Agro illegally collected Rs1.86 crore through issuance of redeemable preference shares to 1,223 investors, says SEBI
Market regulator Securities and Exchange Board of India (SEBI) has restrained ATM Agro Industries India Ltd from mobilising 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.
According to SEBI order, the company was engaged in fund mobilizing activity through issue of redeemable preference shares (RPS) and non-convertible debentures (NCDs) to more than 49 persons without complying with the relevant provisions of the Companies Act, 1956, read with SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
The company and its directors are also restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, according to the SEBI Order.
SEBI had received a complaint dated 8 July 2014, alleging mobilisation of funds inter alia by ATM Agro. SEBI began to investigate but the company was not forthcoming with information from its side. SEBI, when it approached the auditor of the company, found that the auditor disowned the signature and seal of the audit firm and alleged forgery. SEBI was also in receipt of another complaint against ATM Agro on 5 January 2015.
SEBI investigation from published and government sources revealed that the company was incorporated on 30 September 2009, with the ROC, Kolkata with CIN No. as U01400WB2009PLC138634. Its Registered Office is at Judges Court Road, Circuit House More, Medinipur, Kolkata – 721101, West Bengal, India. The present directors are Taimur Ali Gayen, Yusuf Ali Gayen and Indrajit Roy. Sachindra Nath Bhattacharya, Hasem Mirza, Ashmin Khatun, Mirza Dinar, Nandini Chatterjee, Debashish Dasgupta, Kamal Kishore Lodha, Debabrata Ghosh, Pradip Das, Tahidur Rahaman Gayen, Saiful Alam and Mohammad Younus, who were earlier directors in the company, have since resigned.
SEBI in its Order observed, “Under the Offer of RPS, it is observed that during the financial years 2010–11 and 2011–12, ATM Agro allotted redeemable preference shares to a total of 1,223 individuals/ investors and mobilised funds amounting to approximately Rs1.86 crore. The number of investors to whom allotments were made under the Offer of Redeemable Preference Shares alongwith the amount mobilised therein, during the Financial Years 2010–11 and 2011–12 would prima facie indicate that such Offer was a public issue of securities, as prescribed under the first proviso to Section 67(3) of the Companies Act, 1956.”
SEBI in its Order also observed, “Under the Offer of NCDs, it is observed that during the Financial Years 2010–11 and 2011–12, ATM Agro allotted NCDs amounting to a total of Rs7.39 crore. In addition, it is also observed from the debenture certificates submitted by complainants that ATM Agro may have most likely continued to issue NCDs during the Financial Year 2012–13 too. Although details regarding the number of investors under the Offer of NCDs is not available for the aforesaid Financial Years, the quantum of funds mobilised therein coupled with the letters receivedafrom ATM Agro’s auditors, would prima facie lead to the inescapable conclusion that such Offer was a public issue of securities as prescribed under the first proviso to Section 67(3) of the Companies Act, 1956.”
SEBI, in its strictures on the company, pointed out, “it will follow that since the Offer of Redeemable Preference Shares and Offer of NCDs are public issues 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 for the instant case.”
SEBI hence infers, “it prima facie appears that ATM Agro has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of Redeemable Preference Shares and Offer of NCDs.”
The debenture reserve created is also only Rs6.18 lakh and that too only in FY2011-12.
In view of these multiple violations by the company, SEBI has barred further fund mobilising activity by the company and its directors and has denied access to the securities market.
To protect the money already collected from the public, SEBI has called for shall provide a full inventory of all its assets and properties. SEBI has also directed the company and its directors that they 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 NCDs, without prior permission from SEBI.
SEBI has also directed the debenture trustees to also stay away from business by saying, “The Debenture Trustees, viz. Trustees of Secured Debentures Trust of ATM Agro (represented by its Trustees, viz. Pratima Roy and Ram Sunder Bhattacharya) and ATM Secure Debenture Trust (represented by its Trustees, viz. Amit Samanta and Jagadish Chandra Nag), are prohibited from continuing with their assignment as debenture trustee in respect of the Offer of NCDs of ATM Agro and also from taking up any new assignment or involvement in any new issue of debentures, etc. in a similar capacity, from the date of this order till further directions.”
SEBI may, on its own, initiate prosecution or other legal action over and above this Order.