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Order in the matter of Resurgere Mines and Minerals India Ltd.

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Court :
SEVI

Brief :
Under Sections 11(1), 11(4), 11A and 11B (1) of the Securities and Exchange Board of India Act, 1992

Citation :
WTM/SM/IVD/ID3/9174/2020-21

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM: S. K. MOHANTY, WHOLE TIME MEMBER

ORDER

Under Sections 11(1), 11(4), 11A and 11B (1) of the Securities and Exchange Board of India Act, 1992
In respect of:

In the matter of IPO of Resurgere Mines and Minerals India Ltd.

Noticee No.

Names of the Noticee

PAN

1.

Resurgere Mines and Minerals India Ltd.

AAACE0111B

2.

Mr. Subhash Sharma

AXCPS8189D

3.

Mr. Amit Sharma

AVRPS2826C

4.

Mr. I. D. Agarwal

AAAPA9527G

5.

Mr. Burzin Somandy

AIEPS6910P

6.

Mr. Harish Khetan

AAHPK3325R

(The aforesaid entities are hereinafter individually referred to by their respective names/Noticee nos. and collectively as “Noticees”, unless the context specifies otherwise)

BACKGROUND

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted an investigation into the Initial Public Offer (hereinafter referred to as “IPO”) of Resurgere Mines and Minerals India Ltd (hereinafter referred to as “Resurgere / Company / Noticee no. 1”). Resurgere is reportedly engaged in extraction, processing and sale of mineral products and exploration and development of mining assets. It came out with an IPO during August 11-13, 2008.

2. Resurgere filed a Red Herring Prospectus dated August 1, 2008 (hereinafter referred to as “RHP/Offer Document”) and subsequently, filed a Prospectus dated August 22, 2008 for the public issue of 44,50,000 equity shares of face value of INR 10/- each at a price of INR 270/- per share (including premium of INR 260/-) aggregating to INR 120.15/- Crores. The IPO also comprised reservation of 2,50,000 equity shares aggregating to INR 6.75/- Crores for eligible employees of the Company. The equity shares of Resurgere got listed on Bombay Stock Exchange (hereinafter referred to as “BSE”) and National Stock Exchange (hereinafter referred to as “NSE”) on September 1, 2008.

3. The investigation conducted by SEBI revealed that the entities who had applied for the IPO under the employees category were indirectly funded by the Company for making application in the Company’s IPO. It was also observed that funds raised through IPO were subsequently not used as per the objects stated in the Offer Document/Prospectus and were siphoned off from the Company. Further, it was revealed that the Company had not disclosed in the Prospectus about the ICD taken by it during the IPO.

4. Accordingly, based on the factual findings as unearthed in the course of investigation a common Show Cause Notice dated March 22, 2017 (hereinafter referred to as “SCN”) was issued to the Company (Noticee no. 1), its Directors (Noticees no. 2 to 5) and Chief Financial Officer-Noticee no. 6 (hereinafter referred to as “CFO”) for the alleged violation of provisions of SEBI Act, 1992 (hereinafter referred to as “SEBI Act”), SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”) and SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 (hereinafter referred to as “ICDR Regulations”). The SCN alleged that the Noticees were responsible for siphoning off the IPO proceeds and have made wrong and misleading disclosures in the Prospectus by disclosing that all statements in the Prospectus are true and thereby called upon them to show cause as to why suitable directions not be issued against them under Sections 11(4), 11A and 11B of the SEBI Act. A supplementary SCN dated January 9, 2019 was subsequently issued to all the Noticees, alleging further violation of provisions of SEBI (Disclosure and Investor Protection) Guidelines, 2000 (hereinafter referred to as “DIP Guidelines”) read with ICDR Regulations.

To read more in details, find the enclosed file

 

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on 30 September 2020
Published in LAW
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