Description

SEBI initiated proceedings against Bengal Artisans Craft Company Limited and its directors for issuing equity shares to more than 200 persons without following public issue norms under Securities laws.

Summary

SEBI has issued an order under Sections 11(1), 11(4), 11A and 11B(1) of the SEBI Act, 1992 against Bengal Artisans Craft Company Limited (BACCL) and its 10 directors for violations related to public issue of securities. The company allegedly issued equity shares to more than 200 persons during March 2009 to November 2010 without following public issue norms as required under the Companies Act and SEBI regulations.

Key Points

  • Bengal Artisans Craft Company Limited incorporated on June 18, 2007 with registered address at 33, Bondel Road, Kolkata
  • 10 directors involved including Prakash Chand Tripathi, Sumita Ghose, Soma Roy, Anima Mondal, Eleanor Margaret King, Rajendran Kavil Poduvattil Achutan, Vivek Rishi, Arun Chanda, Bulu Raha, and Pankaj Pradeep
  • Matter referred to SEBI by Registrar of Companies, West Bengal on November 14, 2018
  • Company issued equity shares to more than 200 persons in violation of public issue norms
  • SEBI initially advised company to provide exit option to shareholders in June 2021
  • Company submitted compliance report in September 2021

Regulatory Changes

  • SEBI circular dated March 13, 2024 repealed earlier DPI Exit circulars that outlined procedures for securities issued prior to April 1, 2014
  • New framework addresses cases involving offer/allotment of securities to more than 49 but up to 200 investors in a financial year

Compliance Requirements

  • Companies must follow public issue norms when issuing securities to more than prescribed limits
  • Compliance with Companies Act provisions regarding prospectus and allotment of securities
  • Directors must ensure company adherence to securities regulations

Important Dates

  • March 2009 to November 2010: Period of alleged violations
  • November 14, 2018: Matter referred to SEBI by RoC
  • June 24, 2021: SEBI advised company to provide exit option
  • September 10, 2021: Company submitted compliance report
  • March 13, 2024: SEBI issued new circular repealing earlier DPI Exit circulars

Impact Assessment

This enforcement action reinforces SEBI’s commitment to ensuring compliance with public issue norms and protecting investor interests. The case highlights the importance of proper regulatory compliance when issuing securities and the consequences of violations. It serves as a precedent for similar cases and emphasizes directors’ responsibilities in ensuring regulatory compliance.

Impact Justification

Enforcement action against company for securities law violations, impacts corporate compliance standards