SAT reduces market ban period on Inventure Growth, eases curbs on directors

Securities Appellate Tribunal on Thursday reduced the market ban period on Inventure Growth and Securities to three years as well as set aside restrictions on certain directors of the company in a matter related to furnishing of false information in IPO documents. In August, Sebi had barred the company and all its directors from the securities market for four years.

Now, the tribunal has done away with the restrictions that were imposed by Sebi on non-executive and independent directors, saying they were not involved in the day-to-day management and control of the company. For chairman and managing director as well as executive directors and whole-time director during the period when the violations happened, the tribunal has eased the restrictions. They have now been barred only from associating themselves with any listed company or partners in a partnership firm.

They have been restrained from holding any fresh position for three years starting from January 1, 2019. Besides, the market ban on the company has been reduced to three years from four years.

Markets regulator in an order passed in August 2019 barred the firm and the officials from the securities markets for a period of four years for concealing "material information" and making false and inadequate disclosures in the initial public offer (IPO) documents. Also, Sebi found that the firm had misutilised the proceeds received from the initial share-sale by applying them towards activities not disclosed in the prospectus and made false statements in its prospectus with respect to raising bridge loans and other financial arrangements.

The officials were banned for giving a wrong certificate in the prospectus and thereby were held responsible for concealing material information. The company and its officials violated issue of capital and disclosure requirements (ICDR) regulations, Sebi said.

While taking cognizance of the issue of raising bridge loan, SAT said "in the prospectus it was positively declared that the company has not raised any bridge loan. Thus on this count it can clearly be declared that a false/wrong declaration was made in the prospectus in violation of ICDR Regulations." Besides, the tribunal held that "the company failed to disclose the deposits in the prospectus and, therefore, violated the Regulation."

However, regarding non utilization of the IPO proceeds towards the stated object, SAT in its order said "the charge that the company has misutilised part of the fund by failing to appropriate the necessary amount towards money advanced by its subsidiaries specifically cannot be sustained." Accordingly, the tribunal has reduced the period of restraint on the firm from four years to three years.

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