OFCD case: SEBI moves SC against SAT relief to SICCL managers, company secretary
The vacation bench of Chief Justice Surya Kant and Justice V Mohana is scheduled to hear SEBI’s plea on June 18.
Read more: Sebi plans to ease KYC rules for FPIs and offer greater clarity to global capital
On March 9, SAT upheld SEBI’s regulatory action against SICCL and dismissed objections filed by the company and its directors in connection with the alleged illegal issuance of optionally fully convertible debentures (OFCDs).
The three-member SAT bench had held that OFCDs issued by SICCL between 1998 and 2008 constituted public offers and they fell within the regulatory jurisdiction of SEBI.
The court had said that SICCL had mobilized around Rs 14,106 crore from around 1.98 crore investors through these bonds during the period. It was also held that such a large-scale mobilization of funds from such a large number of investors could not be considered a private placement, as the company claimed.
While the court dismissed the objections filed by SICCL and its directors, it allowed a separate objection filed by the four directors and the company secretary, but ruled that as employees they could not be held responsible for the actions of the company. He also noted that the prospectus was signed by the company secretary pursuant to a power of attorney granted by the directors, who remain liable for the actions of their representatives.
Read more: Sebi Chief: Sebi review to ensure broker net worth rules are risk-compatible
SEBI has now challenged this part of the decision before the top court.
The case relates to an order issued by SEBI in October 2018, directing the company to return money raised through bonds, disclose inventory details and ban certain officials from accessing the securities market.
