SEBI cautions retail investors on NCDs and non-convertible preference shares offered through private placement
Moneylife Digital Team 23 April 2015

Any offer of securities made to 50 or more persons has to be construed as a “Public Offer” under the provisions of Companies Act, 1956, points out SEBI in a release

 

Some unlisted companies are luring retail investors by issuing  securities  including non-convertible debentures/ non-convertible preference  shares in the garb of private placement,  without  complying with the provisions of Companies Act, 1956 read  with  the Companies Act, 2013, SEBI (Issue and Listing of  Debt Securities), Regulations, 2008 and SEBI (Issue and Listing of  Non-Convertible  Redeemable Preference Shares),Regulations, 2013, points out SEBI in a release.
 
Any offer of securities made to 50 or more persons has to be construed as a “Public Offer” under the provisions of Companies Act, 1956, warns SEBI.
 
In case of private placements, the company shall not release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about such an offer. Further, such offer or invitation shall not be made to more than 200 persons in the aggregate in a financial year, cautions SEBI.
 
Investors are also cautioned not to subscribe to such issues. List of the Companies against whom orders have been passed by SEBI is given below:
 
 
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