SEBI bars merchant banker First Overseas Capital from managing public issues

Market regulator Securities and Exchange Board of India (SEBI) has barred merchant banker First Overseas Capital Limited (FOCL) from managing any public issue till further orders after it found the company in violation of SEBI’s merchant banking norms.

The capital market watchdog has also issued a show-cause notice to FOCL and sought its reply as to why an inquiry should not be initiated against the company and a penalty imposed on it.

“In view of the prima facie observations and findings recorded in the preceding paragraphs and to protect the integrity of the securities market, I, exercise the powers conferred on me under Sections 11, 11(4) and 11B(1) read with Section 19 of the SEBI Act, 1992 , pending adjudication of the allegations detailed in this order, hereby prohibit the noticeee from taking any new orders in connection with the business of issue management by selling, purchasing or making related arrangements, subscribing to securities or acting as manager, consultant, advisor or in connection with such issue management. Rendering corporate advisory services, till further orders,” Sebi ruled in its 33-page order.

The regulator, in its prima facie observations, found that FOCL had violated various rules, including not maintaining the minimum net worth requirement for six consecutive years from 2018-19, knowingly submitting false and misleading statements to SEBI and engaging in other business activities. . Nor to disclose his track record in securities market and as per SEBI circular.

On the issue of false and misleading information, the regulator registered at least half a dozen cases including misleading information regarding availability of statutory auditor, investment compared to loans in property development business, compliance officer. and the net worth of the company for the financial years 2021-22 and 2022-23.

FOCL was also found to be non-compliant with MB certification requirements. “A merchant banker is required to ensure that at least two KMPs have a certificate from NISM for “NISM-Series-IX: Merchant Banking Certification Examination”. No certificate. (beginning of inspection period) and August 05, 2023 and thereafter only one KMP had a certificate,” the 33-page order said.

FOCL has been given 21 days to file its reply/objection.

The interim order was announced by Sebi Whole Time Member Ashwani Bhatia.

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