{"id":6735,"date":"2015-08-06T10:08:00","date_gmt":"2015-08-06T10:08:00","guid":{"rendered":"http:\/\/localhost\/sccblog\/?p=6735"},"modified":"2015-10-14T12:47:18","modified_gmt":"2015-10-14T07:17:18","slug":"listing-and-issue-of-prospectus-mandatory-before-public-placement-offer-sebi-found-alchemist-capital-ltd-and-its-directors-guilty-of-illegally-raising-capital-from-the-public","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2015\/08\/06\/listing-and-issue-of-prospectus-mandatory-before-public-placement-offer-sebi-found-alchemist-capital-ltd-and-its-directors-guilty-of-illegally-raising-capital-from-the-public\/","title":{"rendered":"Listing, and issue of prospectus mandatory before public placement offer \u2014SEBI found Alchemist Capital Ltd and its directors guilty of illegally raising capital from the public"},"content":{"rendered":"<p ><b><span lang=\"EN-GB\"><font size=\"2\">Security and Exchange Board of India:<\/font> <\/span><\/b><span lang=\"EN-GB\">Alchemist Capital Ltd (\u201cACL\u201d), an NBFC, has been found guilty for making offer and allotment of securities (RPS) in the garb of private placement to general public without complying with law. <\/span><b><span lang=\"EN-GB\">&nbsp;<\/span><\/b><span lang=\"EN-GB\">T<\/span><span lang=\"EN-US\"  ><font size=\"3\">he Company failed to comply with the norms stipulated for public issue of securities under the Companies Act, 1956 (sections 56, 60 read with section 2(36), 73) and the DIP Guidelines read with the ICDR Regulations. The Company had made a public issue of securities, it was under an obligation to comply with the Companies Act, 1956, SEBI Act, and the rules, regulations and guidelines framed thereunder which regulate the public issue of equity shares. &nbsp;<o:p><\/o:p><\/font><\/span><\/p>\n<p ><font size=\"3\"><span lang=\"EN-US\">ACL did not issue a prospectus before making offer neither did it listed itself to any recognized stock exchange. Section 73(1); of the Companies Act, 1956 casts an obligation on every company intending to offer shares or debentures to the public to apply on a stock exchange for listing of its securities. Such companies have no option or choice but to list their securities on a recognized stock exchange, once they invite subscription from over forty nine investors from the public. If an unlisted company expresses its intention, by conduct or otherwise, to offer its securities to the public by the issue of a prospectus, the legal obligation to make an application on a recognized stock exchange for listing starts. Section 2(36) of the Companies Act read with section 60 and 56&nbsp; thereof, mandates a company to register its &#8216;prospectus&#8217; with the RoC, before making a public offer\/ issuing the &#8216;prospectus&#8217;. ACL did neither issue nor <\/span><span lang=\"EN-GB\">file any Prospectus with respect to its offer and allotment of RPS<\/span><span lang=\"EN-US\"  >. Also, the company did not file any offer document with SEBI and has also not complied with the requirements of regulation 111 of the ICDR Regulations (erstwhile DIP Regulations). &nbsp;For the above mentioned contraventions the Company is held liable to make refunds as per the mandate under section 73(2) of the Companies Act, 1956 and also for regulatory action for committing the above violations.<\/span><\/font><\/p>\n<p ><span lang=\"EN-GB\"><font size=\"3\">The capital market watchdog relying heavily on the Supreme Court\u2019s ruling in the <i>Sahara India Real Estate Corpn <\/i>case held that the exemption, w.r.t public placement, available to an NBFC under the second proviso to section 67(3) of the erstwhile Companies Act, 1956 is only with respect to the number of persons and not the complete provisions of section 67(3). &nbsp;SEBI ruled that the onus is on the company to prove that the offer it had made is a private placement of securities. Mere statement that the issuance of shares was not calculated to result, directly or indirectly, in the shares becoming available for subscription or purchase by persons other than those receiving the offer; the offer made was otherwise as being a domestic concern of the persons making and receiving the offer or invitation, would definitely not suffice.<o:p><\/o:p><\/font><\/span><\/p>\n<p ><span lang=\"EN-GB\"><font size=\"3\">SEBI also ruled that t<\/font><\/span><span lang=\"EN-US\"><font size=\"3\">he directors of ACL who were on the Board of Directors during the period when offer for issuance of RPS and subsequent allotment are liable for such violations committed by the Company. &nbsp;<\/font><i><font size=\"3\">In re Alchemist Capital Limited,&nbsp;<\/font><\/i><\/span><span><a href=\"http:\/\/www.scconline.com\/LoginForNewsLink\/2015_SCC_OnLine_SEBI_2 \">2015 SCC OnLine SEBI 2<\/a>,&nbsp;<\/span><i><font size=\"3\">decided on 03.08.2015<\/font><\/i><\/p>\n<p ><span lang=\"EN-GB\">&nbsp;<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Security and Exchange Board of India: Alchemist Capital Ltd (\u201cACL\u201d), an NBFC, has been found guilty for making offer and allotment of <\/p>\n","protected":false},"author":3,"featured_media":7321,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11],"tags":[3661],"class_list":["post-6735","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tribunals_commissions_regulatorybodies","tag-allotment_of_securities"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Listing, and issue of prospectus mandatory before public placement offer \u2014SEBI found Alchemist Capital Ltd and its directors guilty of illegally raising 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Further, the company and its present and past directors are prohibited from issuing prospectus or any offer document or issue advertisement\u2026","rel":"","context":"In &quot;Tribunals\/Commissions\/Regulatory Bodies&quot;","block_context":{"text":"Tribunals\/Commissions\/Regulatory Bodies","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/tribunals_commissions_regulatorybodies\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/10\/scc-blog_Page_9.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/10\/scc-blog_Page_9.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/10\/scc-blog_Page_9.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/10\/scc-blog_Page_9.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/10\/scc-blog_Page_9.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":214061,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/04\/29\/sebi-issuance-of-the-equity-shares-by-the-company-for-the-various-plans-policies-scheme-and-share-debentures-to-more-than-50-members-is-public-equity-share\/","url_meta":{"origin":6735,"position":1},"title":"SEBI | Issuance of equity shares by the Company for various plans\/policies\/scheme and share\/debentures to more than 50 members is public equity share","author":"Bhumika Indulia","date":"April 29, 2019","format":false,"excerpt":"Securities and Exchange Board of India (SEBI): The Board comprising of Madhabi Puri Buch (Whole Time Member) passed the direction to the directors of the company, Kaizar Biswas,\u00a0 Mohammed Jiaur Rahaman, Ajijur Rahaman,\u00a0 Abu Sama Molla, Ashraful Hoque and Sariful Islam to pay the Equity Share amount of maturities of\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":237377,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/10\/13\/sebi-liability-under-s-732-of-companies-act-1956-lies-on-the-company-along-with-the-director-who-is-officer-in-default-as-per-s-5-of-companies-act-1956\/","url_meta":{"origin":6735,"position":2},"title":"SEBI | Liability under S. 73(2) of Companies Act, 1956, lies on the company along with the director who is \u2018officer in default\u2019 as per S. 5 of Companies Act, 1956","author":"Editor","date":"October 13, 2020","format":false,"excerpt":"Securities and Exchange Board of India (SEBI): Anant Barua (Whole-time member) passed the order in exercise of his powers under Sections 11 and 11B read with Section 19 of the Securities and Exchange Board of India Act, 1992. The facts in the instant case are such that the company PDS\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":379315,"url":"https:\/\/www.scconline.com\/blog\/post\/2026\/03\/25\/sc-diversion-of-preferential-allotment-funds-cant-be-ratified\/","url_meta":{"origin":6735,"position":3},"title":"Diversion of preferential allotment funds, contrary to disclosed object, constitutes violation of PFUTP Regulations: Supreme Court","author":"Ritu","date":"March 25, 2026","format":false,"excerpt":"Emphasizing investor protection and market transparency, the Supreme Court ruled that the unlawful diversion of preferential issue proceeds could not be legitimized through subsequent shareholder ratification.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Diversion of preferential allotment funds","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2026\/03\/Diversion-of-preferential-allotment-funds-1.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2026\/03\/Diversion-of-preferential-allotment-funds-1.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2026\/03\/Diversion-of-preferential-allotment-funds-1.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2026\/03\/Diversion-of-preferential-allotment-funds-1.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":252506,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/08\/10\/merger-of-sebi-issue-and-listing-of-debt-securities-regulations-2008-and-sebi-issue-and-listing-of-non-convertible-redeemable-preference-shares-regulations-2013-into-sebi-issue-and-listing-of-n\/","url_meta":{"origin":6735,"position":4},"title":"Merger of SEBI (Issue and listing of Debt Securities) Regulations, 2008 and SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 into SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021","author":"Prachi Bhardwaj","date":"August 10, 2021","format":false,"excerpt":"The Securities and Exchange Board of India has notified SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 on August 9, 2021. 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