Order in the matter of Investigation in the matter of disclosures by Farmax India Ltd. in respect of its GDR issue

Last updated: 20 November 2020

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The Securities and Exchange Board of India (SEBI) investigated Farmax India Limited's Global Depository Receipts (GDR) issue. The investigation focused on whether the GDRs were issued to defraud investors, if shares were properly considered, and if adequate disclosures were made. It was found that a loan was taken by Vintage FZE from EURAM Bank against the GDR proceeds, and these proceeds were pledged as security even before the GDRs were issued.

Court :
SEBI

Brief :
Securities and Exchange Board of India ("SEBI") had conducted investigation against several Indian companies that had issued Global Depository Receipts ("GDR") in overseas markets. In this regard, on an enquiry with European American Investment Bank ("EURAM Bank") about the loan taken by initial GDR subscribers, it was informed that in respect of GDR issue of Farmax, M/s. Vintage FZE ("Vintage"), now known as Alta Vista International, had availed loan against the GDR proceeds of Farmax India Limited (“FIL / Farmax”). Accordingly, SEBI had investigated the issue of loan taken against the GDR proceeds of Farmax during the issuance of GDR i.e. June 01, 2010 to August 31, 2010 (hereinafter referred to as "Investigation Period ("IP")) to ascertain as to whether:

Citation :
[ADJUDICATION ORDER: EAD-9/VKV/GSS/2020-21/9575]

Daily Limit Reached