SEBI charges Asirvad Micro Finance with illegal public NCD issue

This order details SEBI's adjudication proceedings against Asirvad Micro Finance Limited (AMFL) for allegedly issuing Non-Convertible Debentures (NCDs) as a private placement that was deemed a public issue due to down-selling to over 200 investors, thereby violating the Companies Act, 2013, and SEBI regulations.

Who it concerns: Asirvad Micro Finance Limited (AMFL); Karvy Capital Limited (KCL) is mentioned as the initial allottee and service provider in the allegations.

What SEBI found or ordered

• SEBI alleged AMFL violated Section 42 of the Companies Act, 2013, and various provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
• SEBI observed that NCDs allotted to Karvy Capital Limited were down-sold to 739 investors before listing, deeming the issue a public one.
• SEBI alleged AMFL failed to file a draft offer document, issue an abridged prospectus, or create a Debenture Redemption Reserve (DRR).
• The order records the appointment of Adjudicating Officers and the service of a Show Cause Notice dated September 03, 2024.
• The text provided is truncated and does not contain the final penalty amount or final direction imposed by the Adjudicating Officer.

Also in the document

• The alleged violation involves a transaction where Karvy Capital Limited charged INR 1 Crore in structuring fees, leading SEBI to view KCL as a service provider rather than an investor.
• The issue involved two tranches of NCDs listed in June 2019, with the first tranche involving INR 40 Crores paid by KCL.
• The document is an adjudication order under Section 15-I of the SEBI Act, 1992.