1. Some unlisted companies are luring retail
investors by issuing securities including non-convertible debentures (NCD) and convertible debentures/
non-convertible and convertible preference shares/ equity 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, SEBI (Issue and Listing of Non- Convertible Redeemable
Preference Shares), Regulations, 2013 and SEBI (Issue of capital and Disclosure
Requirements) Regulations, 2009.
2. 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.
3. Under Companies Act, 2013, “Private Placement” shall be made
only to such persons whose names are recorded by the company prior to the
invitation to subscribe. Further, 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
4. As per the provisions of Companies Act, 2013 and SEBI
Regulations, no issuer shall make public issue of these securities, unless it
has made application to the recognized Stock Exchange(s) for listing of such securities.
Further, the issuer, among the other things, is required to file the offer
document with RoC/Stock
Exchange/SEBI etc. The issuer has to make disclosures about the
issuer company, the promoters of the company, the risk factors etc.
5. SEBI has taken action against 193 such entities for issuance of
securities in the form of non-convertible and convertible preference shares/
non-convertible and convertible debentures/ equity shares to public, without complying
with the prescribed provisions of law as referred in Para 1, 2, 3 & 4
above.
6. List of the Companies against whom orders have been passed by
SEBI is given below with this press release. The orders are also available on
SEBI website at www.sebi.gov.in
7. SEBI has also passed orders against entities/ individuals who
have acted as debenture trustees for debt issuance of companies without being
registered with SEBI as Debenture Trustee as per SEBI Act, 1992.
8. Companies are cautioned not to issue
securities to public without complying with provisions of law as referred in
Para 1, 2, 3 & 4 above, failing which SEBI will be constraint to take
stringent action against such companies
and their directors.
9. Investors are also cautioned not to
subscribe to such issues. Investors are advised to see whether any such entity
has filed offer document or filed application with Stock Exchange for listing.
10. Individuals/Entities acting as Debenture Trustees without
being registered with SEBI, are advised not to act in the said capacity.
Order passed in respect of Deemed public issues U/s 67 of the
Companies Act, 1956
