The regulator has also banned First Overseas Capital Ltd (FOCL) from accessing and trading in the securities markets for a period of two years.
In a 43-page order, Sebi found that FOCL had provided false and misleading information, failed to notify Sebi of securities acquired under underwriting obligations, delayed filing of half-yearly reports, failed to ensure NISM certification of key management personnel and failed to disclose track records on its website.
“The notification holder (First Overseas Capital Ltd) has not complied with the asset requirements since the financial year 2018-19 and it was only after directions from the SAT (Securities Appellate Tribunal) that the notification holder complied,” Sebi’s full-time member (WTM) Amarjeet Singh said in the order.
He noted that the asset value requirement is not a paper requirement that the applicants have to fulfill at the time of applying for registration with Sebi.
“An appropriate net worth requirement, in the case of investment bankers, ensures that the entities are financially sound to meet the insurance obligations, if and when the need arises. Further, it also instills confidence among the investors/entities regarding the financial stability of investment bankers.” IPOs (initial public offers) managed by the company were healthy,” Sebi’s WTM Amarjeet Singh said. Singh added that such an approach is not only against legal provisions but also puts First Overseas Capital Ltd’s clients at risk, in cases where the investment banker fails to fulfill its obligations.
Accordingly, Sebi restrained Mumbai-based FOCL from taking up any new mandate in relation to managing emissions or acting as a manager or providing corporate advisory services for a period of two years.
The regulator has also imposed fines totaling Rs 20 lakh on FOCL for violation of MB rules.
The Securities and Exchange Board of India (Sebi) conducted an inspection of FOCL from April 2021 to March 2022. During the inspection, Sebi noted that the manager had failed to maintain a net worth of Rs 5 crore and had therefore violated the MB (Merchant Bankers) rules.
Following this, the regulator initiated investigation proceedings against the company and suspended FOCL’s registration certificate for two months for violation of norms.
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