Description

SEBI order under Sections 11(1), 11(4), 11(4A), 11A and 11B against KKP Marketing India Limited and 11 individuals for alleged fraudulent public issue, misappropriation of funds, and failure to list shares.

Summary

SEBI has issued an order under Sections 11(1), 11(4), 11(4A), 11A and 11B of the SEBI Act, 1992 in the matter of KKP Marketing India Limited (CIN: U52390GJ2010PLC060882) and 11 associated individuals. The order follows a complaint filed on August 17, 2021 by investors alleging fraudulent public issuance of equity shares in 2010, non-listing of shares despite promises, failure to pay dividends, misappropriation of company funds for real estate purchases, and fabricated AGM meetings.

Key Points

  • KKP Marketing India Limited incorporated on May 24, 2010, is a public unlisted company registered in Bhuj, Gujarat
  • 12 noticees named: the company and 11 individuals including Mr. Jayantbhai Karamshibhai Patel, Mr. Damji Hirjibhai Patel, and others
  • Complaint alleges fraudulent public issue of equity shares at Rs. 10/- per share in 2010 without complying with Companies Act, 1956 provisions
  • Promoters allegedly promised minimum share price of Rs. 200/- upon listing and higher dividends at public meeting in Bhuj-Kutch
  • After 11 years, shares remain unlisted and no dividends have been paid to shareholders
  • Alleged misappropriation of Rs. 3,01,62,075/- transferred to directors’ accounts as short-term loans and advances as of March 31, 2019
  • Additional Rs. 35,50,000/- loaned to M/s Khodiyar Foods Ltd. and Rs. 2,98,58,925/- advanced for immovable properties
  • Company allegedly deviated from stated agricultural marketing business to engage in real estate without shareholder consultation
  • AGM meetings allegedly never conducted despite fabricated minutes

Regulatory Changes

No new regulatory changes announced. This is an enforcement action under existing SEBI Act provisions.

Compliance Requirements

The order document provided contains only the background section. Specific compliance requirements, directions, penalties, or findings will be detailed in the complete order document.

Important Dates

  • May 24, 2010: KKP Marketing India Limited incorporated
  • 2010: Alleged fraudulent public issue of equity shares
  • August 17, 2021: Complaint filed with SEBI
  • March 31, 2019: Balance sheet date showing alleged fund misappropriation
  • February 2, 2026: Order reference date

Impact Assessment

Market Impact: Limited direct market impact as KKP Marketing India Limited is an unlisted company. However, the case highlights regulatory scrutiny of unlisted public companies and enforcement against fraudulent fund-raising practices.

Investor Impact: Affects investors in KKP Marketing India Limited who purchased shares during the 2010 public issue, primarily from the Patel community in Gujarat. Investors have not received dividends or liquidity through listing despite alleged promises.

Regulatory Significance: Demonstrates SEBI’s jurisdiction and enforcement action against unlisted companies that raise funds from the public, sending a warning signal about fraudulent fund-raising practices and misappropriation of investor funds.

Compliance Alert: Unlisted public companies must ensure compliance with applicable company law provisions, conduct proper AGMs, maintain transparent financial reporting, and honor commitments made to shareholders during fund-raising.

Impact Justification

SEBI enforcement action against unlisted company and promoters for alleged fraud, affecting specific investor group but limited broader market impact