Description

SEBI issues order against AFCO Capital India Private Limited (SEBI Reg. No. INM000012555) for violations of Merchant Bankers Regulations, Intermediaries Regulations, PFUTP and PIT Regulations following inspection for April 2022 to August 2024.

Summary

SEBI has issued an order against M/s AFCO Capital India Private Limited (SEBI Registration No. INM000012555, PAN: AACCF0194M), a registered Merchant Banker, under Section 12(3) of the SEBI Act, 1992, Regulation 27 of the SEBI (Intermediaries) Regulations, 2008, and Regulation 35 of the SEBI (Merchant Bankers) Regulations, 1992. The action follows an inspection conducted on October 25, 2024, covering the period April 1, 2022 to August 31, 2024, during which multiple regulatory violations were identified.

Key Points

  • AFCO Capital India Private Limited is a registered Merchant Banker (Reg. No. INM000012555) found in violation of multiple SEBI regulations.
  • SEBI conducted an inspection on October 25, 2024, covering the period April 1, 2022 to August 31, 2024.
  • Violations were found across Merchant Bankers Regulations, Intermediaries Regulations, PFUTP Regulations, PIT Regulations, and SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007.
  • The Designated Authority (DA), appointed to conduct proceedings, submitted a Report dated December 30, 2025.
  • The DA recommended prohibiting the noticee from taking up any new assignment or contract as a merchant banker for a period of two months under Regulation 26(1)(iv) of SEBI (Intermediaries) Regulations, 2008.
  • A Show Cause Notice (SCN) was issued on February 4, 2026.
  • The noticee replied on February 20, 2026 and availed a personal hearing on March 12, 2026, represented by Advocate Saurabh Bacchawat.
  • Post-hearing written submissions were made on March 13, 2026.
  • The noticee contended that the violations were technical and procedural in nature, that all issues have since been rectified, and that the assignment was its first after receiving the merchant banker license, earning only Rs. 3,50,000 in fees with no commercial profit.

Regulatory Changes

No new regulatory changes are introduced by this order. The order applies existing provisions under:

  • Section 12(3) of the SEBI Act, 1992
  • Regulation 27 of SEBI (Intermediaries) Regulations, 2008
  • Regulation 35 of SEBI (Merchant Bankers) Regulations, 1992
  • Regulation 26(1)(iv) of SEBI (Intermediaries) Regulations, 2008 (basis for the recommended restriction)

Compliance Requirements

  • M/s AFCO Capital India Private Limited is subject to the penalty/restriction as determined in this order.
  • The noticee must comply with any prohibition on new merchant banking assignments for the duration specified in the final order.
  • Other merchant bankers should note the regulatory expectations around compliance with Merchant Bankers Regulations, PFUTP Regulations, PIT Regulations, and certification requirements for associated persons.

Important Dates

  • April 1, 2022 – August 31, 2024: Inspection period covered by SEBI.
  • October 25, 2024: Date of SEBI inspection.
  • December 30, 2025: DA Report submitted recommending two-month restriction.
  • February 4, 2026: Show Cause Notice (SCN) issued to the noticee.
  • February 20, 2026: Noticee filed reply to the SCN.
  • March 12, 2026: Personal hearing availed by the noticee.
  • March 13, 2026: Post-hearing written submissions filed.

Impact Assessment

The impact of this order is limited to M/s AFCO Capital India Private Limited and does not affect broader market participants or listed securities. The recommended restriction — a two-month prohibition on accepting new merchant banking assignments — is relatively limited in scope. The noticee’s argument that the violations were technical, procedural, and rectified, and that the assignment was its first with minimal fees, may be considered in the final quantum of penalty. This case underscores SEBI’s continued scrutiny of intermediaries for compliance with conduct, disclosure, and insider trading norms even for smaller or first-time engagements.

Impact Justification

Order targets a single registered merchant banker for procedural and technical violations; Designated Authority recommended a two-month ban on new assignments. Impact is confined to the noticee entity and does not affect broader market operations or listed stocks.