SEBI finds FOCL's net worth below ₹5 crore for FYs 2019, 2020, 2021

Who it concerns: First Overseas Capital Ltd. (FOCL)

What SEBI found or ordered

• SEBI found that FOCL's net worth was below the statutory threshold of INR 5 crores for FYs 2019, 2020, and 2021.
• The Designated Authority (DA) recommended suspending FOCL's registration certificate for six months and issuing a regulatory censure.
• FOCL admitted to the violation in its replies and attributed the shortfall to accumulated losses and the COVID-19 pandemic.
• SEBI rejected the argument that the pandemic provided an exemption, stating the net worth requirement must be met at all times.
• The order notes that FOCL had previously been penalized for violations of Merchant Banker Regulations.

Also in the document

• The net worth shortfall was significant, dropping to approximately INR 1.92 crores in FY 2020, well below the INR 5 crore requirement.
• FOCL argued that it had already infused INR 3 crores to meet the requirement by March 2023/2024, but SEBI noted this does not exonerate the failure for the earlier years.
• The company claimed it had stopped receiving new mandates due to ongoing SEBI investigations, citing an Interim Order cum SCN dated October 23, 2024.