Market regulator Securities and Exchange Board of India (SEBI) has cancelled the merchant banking registration of Corporate Strategic Allianz Pvt Ltd (CSAPL), citing several severe violations of the SEBI Merchant Bankers Regulations, 1992 (MB Regulations) and related circulars.
The cancellation of CSAPL's registration follows a thorough inspection by SEBI that revealed significant non-compliance with multiple regulatory provisions, including a failure to maintain adequate infrastructure for conducting merchant banking activities, non-payment of required renewal fees, failure to update contact details and missing half-yearly reports.
In an order, Amarjeet Singh, whole-time member (WTM) of SEBI, says, "Considering the totality of the circumstances and the violations on part of Corporate Strategic Allianz, I am inclined to agree with the recommendation made by the designated authority (DA) that the certificate of registration of the noticee be cancelled".
SEBI's inspection, which covered the period from 1 April 2022 to 30 September 2023, was initiated after CSAPL operational practices were scrutinised for failing to meet the necessary regulatory standards.
One of the primary concerns during the inspection was the company's inability to maintain the required infrastructure for conducting merchant banking activities. The company was found to be non-operational, despite multiple attempts to reach CSAPL through the addresses and contact details available on record, including emails and physical inspection at the listed addresses.
SEBI discovered that CSAPL's listed address in Ahmedabad was occupied by another entity, and no one was available at the secondary addresses either. This failure to maintain infrastructure directly violated Regulation 6(aa) of the MB Regulations, which mandates that merchant bankers must have the physical infrastructure in place to carry out their operations.
Further compounding the issue, CSAPL failed to pay the necessary renewal fees for its registration certificate, which were due from 26 January 2019 to 25 January 2022 and 26 January 2022 to 25 January 2025. As per Regulation 12 and Schedule II of the MB Regulations, merchant bankers are required to pay a renewal fee of Rs9 lakh every three years after the first five years of registration. CSAPL's failure to make these payments represented another breach of SEBI rules.
In addition to these violations, CASPL did not inform SEBI of any changes to its contact details or address, as required by Regulation 9A(1)(f) of the MB Regulations. During the inspection, SEBI found that CSAPL had not updated its contact information with the SEBI's SI portal, and the company was unreachable at the addresses originally provided. This further substantiated the claim that CSAPL was not maintaining its merchant banking registration properly.
Another significant area of non-compliance was CSAPL's failure to submit its half-yearly reports to SEBI for the period from 1 April 2022 to 30 September 2023. As per SEBI circulars and the MB Regulations, merchant bankers are required to submit half-yearly reports in a prescribed format, but CSAPL had neglected to do so, breaching regulations 28(2) of the MB Regulations.
This sequence of CSAPL's regulatory failures is compounded by a history of previous non-compliance. In 2016, SEBI restricted CSAPL from accessing the securities market and directed the company to disgorge illegal profits related to a prior violation in the case of Platinum Corporation Limited. Despite an order for disgorgement, which required the company to pay Rs20.64 lakh along with interest, CSAPL failed to settle the amount, leading to suspending its merchant banking activities in 2020. The suspension remains in effect due to the non-payment of the disgorgement amount.
Given these cumulative violations and the company's ongoing failure to comply with SEBI's regulations, SEBI has cancelled Corporate Strategic Allianz's merchant banking registration.
