Description

SEBI order under Sections 11(1), 11(4), 11(4A), 11A and 11B against KKP Marketing India Limited and 11 individuals for fraudulent public issue, misappropriation of funds, and non-compliance with regulatory requirements.

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 addresses complaints regarding fraudulent public issuance of equity shares, misappropriation of company funds, failure to list shares despite promises, non-payment of dividends, and fabrication of AGM meetings.

Key Points

  • KKP Marketing India Limited is an unlisted public company incorporated on May 24, 2010, with registered office in Bhuj, Gujarat
  • Company issued public equity shares in 2010 at Rs. 10/- per share without complying with Companies Act, 1956 provisions
  • Promoters and directors promised listing at minimum Rs. 200/- per share and higher dividends at public meeting in Bhuj-Kutch
  • After 11 years, no dividends paid and shares remain unlisted
  • Directors allegedly misappropriated Rs. 3,01,62,075/- transferred to director accounts as short-term loans and advances as of March 31, 2019
  • Additional advances of Rs. 35,50,000/- to M/s Khodiyar Foods Ltd. and Rs. 2,98,58,925/- for immovable properties
  • Company diverted from stated agricultural marketing business to real estate without shareholder consultation
  • AGM meetings allegedly never conducted; minutes claimed to be fabricated
  • 12 noticees named: KKP Marketing India Limited and 11 individuals including Mr. Jayantbhai Karamshibhai Patel and others

Regulatory Changes

This order does not introduce new regulatory changes but enforces existing provisions under SEBI Act, 1992 Sections 11(1), 11(4), 11(4A), 11A and 11B regarding fraudulent and unfair trade practices.

Compliance Requirements

  • Complaint filed by Mr. Babulal Ratanshi Patel & Others through constituted attorney Mr. Gangji Narayan Patel on August 17, 2021
  • Requested SEBI to take civil and criminal action against directors
  • Demanded company pay interest and damages to shareholders
  • Investigation into violations of Companies Act, 1956 provisions regarding public issue
  • Examination of fund misappropriation and unauthorized business activities

Important Dates

  • May 24, 2010: KKP Marketing India Limited incorporated
  • 2010: Public issue of equity shares conducted
  • March 31, 2019: Balance sheet date showing fund transfers of Rs. 3,01,62,075/-
  • August 17, 2021: Complaint filed with SEBI
  • February 2, 2026: SEBI order issued

Impact Assessment

Investor Impact: High severity for affected shareholders who invested based on false promises of listing and dividends. Investors from Patel community specifically targeted and defrauded over 11+ year period with no returns.

Company Impact: Enforcement action against KKP Marketing India Limited and all 11 named individuals under multiple sections of SEBI Act. Potential for penalties, disgorgement of ill-gotten gains, and criminal proceedings.

Market Impact: Limited direct market impact as company is unlisted. However, sets important precedent for SEBI enforcement against unlisted companies conducting irregular public issues and fraudulent practices.

Regulatory Precedent: Demonstrates SEBI’s jurisdiction and willingness to act on complaints regarding unlisted companies engaging in public solicitation and fraud, protecting retail investors even in non-market contexts.

Impact Justification

High severity enforcement action involving fraudulent public issue and fund misappropriation. Medium market impact as company is unlisted, but significant for investor protection precedent.