Tue. Mar 9th, 2021

Offer to issue Non–Convertible Secured Redeemable Debentures ("NCDs") is a public issue

1 min read

and Exchange Board of India (SEBI): In its prima
facia order the SEBI has directed Goldmine Agro Limited (GAL) that the
company shall not mobilize funds from investors. Further, the company and its
present and past directors are prohibited from issuing prospectus or any offer
document or issue advertisement for soliciting money from the public for the
issue of securities, in any manner whatsoever, either directly or indirectly.

The GAL Company is found guilty
of issuing Non–Convertible Secured Redeemable Debentures (“NCDs”) to
the public in the guise of private placement. It is found that by mobilizing
fund through Offer to Issue NCDs, GAL
has violated the provisions of the Companies Act, 1956 (Section 56, Section 60
read with Section 2(36), Section 73, Sections 117B–117C) read with the Debt
Securities Regulations.

The SEBI relying on the Sahara case [Sahara India Real Estate Corporation Limited v. SEBI, (2013) 1 SCC 1 ] ruled that the Offer of NCDs  is  prima
facie  a public issue in accordance
with the  provisions of the Companies
Act, 1956, the same will attract the requirement of  compulsory listing before a recognized stock
exchange in terms of Section 73(1) of the Companies Act, 1956 and also
compliance with the provisions of Sections 73(2) and 73(3) of that Act and
provisions of the SEBI (issue and Listing of Debt Securities) Regulations,
2008.  [In re
Goldmine Agro Limited and its Directors,  dated June 19, 2015]
Source: Legal news India

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