Sebi fines 8 entities for disclosure lapses in IPO documents

New Delhi: Markets regulator Sebi has penalised Rushil Decor, Corporate Strategic Allianz and six others for disclosure lapses in their IPO documents.

Sebi office. Reuters

Sebi office. Reuters

Sebi has imposed a total penalty of Rs7 lakh on Rushil Decor and signatories of the IPO prospectus -- Vipul Vora, Ghanshyam Ambalal Thakkar, Krupesh Ghanshyambhai Thakkar, Harshadbhai Navnitlal Doshi, Shankar Prasad Bhagat and Hasmukh Kanubhai Modi. These entities raised unsecured loans of Rs5.94 crore after filing draft papers for Rushil Decor’s Rs40 crore IPO but before the allotment of securities.

These loans were taken just before the IPO and repaid immediately after the public issue. They did not disclose the financial liabilities and further that these liabilities would be paid from the IPO proceeds. “It is a material development considering that such loans constituted 14.54 percent of the size of IPO.

“However, no disclosures in this regard were made through public advertisements nor updated in the prospectus filed with the RoC (Registrar of Companies) on July 7, 2011,” Sebi said in an order dated 12 May. Rushil Decor initial share-sale was open for public subscription during June 20-23, 2011. Besides, Sebi has slapped a fine of Rs8 lakh on merchant banker Corporate Strategic Allianz, which handled the IPO, as it failed to ensure that adequate, accurate and all relevant material disclosures were made in the offer document.

It also failed to update the offer document regarding loans amounting to Rs5.94 crore taken by the entities. By not disclosing such information, all these entities have violated Sebi ICDR (Issue of Capital and Disclosure Requirements) regulations.

Updated Date: May 16, 2017 10:11 AM

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