Final Order in the matter of Indian Infotech and Software Limited

The Securities and Exchange Board of India (SEBI) has issued a final order concerning Indian Infotech & Software Limited (IISL). This follows a show cause notice alleging violations of SEBI Act, SCRA, LODR Regulations, and PFUTP Regulations. The investigation originated from a list of shell companies provided by the Ministry of Corporate Affairs, leading to trading restrictions being placed on IISL and other similar entities.

WTM/AB/ISD/ISD-FAC/9555/2020-21
SECURITIES AND EXCHANGE BOARD OF INDIA
FINAL ORDER
UNDER SECTIONS 11(1), 11(4), 11A AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 AND SECTION 12A OF THE SECURITIES CONTRACTS (REGULATIONS) ACT, 1956
In respect of:

In the matter of Indian Infotech & Software Limited.
1. Present proceedings have emanated from a show cause notice dated April 04, 2019 (hereinafter referred to as “SCN”), issued by Securities and Exchange Board of India (hereinafter referred to as “SEBI”), to the abovenamed Noticees, calling upon them to show cause as to why appropriate directions under Sections 11(1), 11(4), 11A and 11B of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) and Section 12A of Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as “SCRA”) should not be issued against them for the violations of provisions of SEBI Act, SCRA, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “LODR Regulations”) and SEBI (Prohibition on Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”), as mentioned therein.

2. The brief narrations of the facts leading to the issue of aforesaid SCN is as under:

(i) SEBI received a letter no. F. No. 03/73/2017-CL-II dated June 9, 2017 from the Ministry of Corporate Affairs (‘MCA’) vide which MCA had annexed a list of 331 shell companies for initiating necessary action as per SEBI laws and regulations. MCA had also annexed the letter of Serious Fraud Investigation Office (‘SFIO’) dated May 23, 2017 which contained the database of shell companies along with their inputs.

(ii) SEBI by its letter dated August 7, 2017 addressed to BSE Ltd. (‘BSE’), inter alia in respect of listed shell companies including Indian Infotech & Software Limited (hereinafter also referred to as ‘IISL’ or ‘company’), placed trading restrictions on promoters/directors of such companies. Vide said letter dated August 7, 2017, SEBI also directed the stock exchanges to place the scrip of such shell companies in the trade to trade category with limitation on the frequency of trades and imposed a limitation on the buyer by way of 200% deposit on the trade value.

(iii) Pursuant to the same, BSE vide notice dated August 07, 2017, to all its market participants, initiated actions envisaged in the SEBI letter dated August 07, 2017 in respect of all the listed shell companies, as identified by MCA and communicated by SEBI, with effect from August 08, 2017.

(iv) IISL vide its letter dated August 17, 2017 made a representation to BSE with a copy marked to SEBI inter alia, submitting as under:

a. Company had filed its Annual Income Tax Return on timely basis and had complied with the Income Tax provision and there are no pending disputes with Income Tax Department.

b. Company had done all compliances with respect to the Companies Act, 2013 and had filed all Annual Returns with the office of Registrar of Companies (ROC), Mumbai

c. Company had not taken any loan from Bank or any Financial Institution. Hence, no default has been made.

To know more in details find the attachment file