Market regulator SEBI is reportedly probing whether the promoters of Sterling & Wilson Solar (SWL) side-stepped regulatory norms and diverted funds raised in IPO.
The market regulator is examining if Sterling & Wilson Solar promoters have violated the Issue of Capital and Disclosure Requirements (ICDR) regulations and also Companies Act, 2013 with regard to misstatement in prospectus, reports The Hindu.
The publication notes – Regulations require that the money raised in the IPO should be utilised only in the way as stated in the prospectus. It is on this basis the public institutions had valued the company and invested in the IPO. In this case, promoters of SWSL are also directors of the company.
Arun Kejriwal, founder, KRIS Capital speaking to the publication said “The primary object of the IPO was to raise funds for re-payment of promoter loans. This has been violated and a mere amount of Rs 250 crore repaid against ₹ 2,850 crore and interest. It is a serious violation and SEBI needs to look into the detail of around ₹ 3,000 crore worth of fund diversion. Currently, only minority shareholders are suffering.”
Source aware of the matter said the publication that SEBI is also probing the role of merchant bankers to the issue as it is their legal obligation to ensure that a company, which had raised money from public, does not divert it for other purposes.
SEBI in the past has taken severe action against several companies and merchant bankers for misstatement in the IPO prospectus pretaining to mis-utilisation of proceeds raised from public.
J N Gupta, founder promoter, SES, a proxy advisory firm speaking to The Hindu said “If the promoters had given undertaking in the IPO prospectus that they will repay the loan within given time and if they fail to do so, it is a violation of SEBI law.”