The entities are being prosecuted for breaching Section 42 of the Companies Act, 2013, which deals with the private placement route of issuing securities.
A business cannot issue securities to more than 200 people within a fiscal year while conducting a private placement offer, per the Companies Act.
As part of its crackdown on illicit financing, the corporate affairs ministry fined two businesses and nine individuals about Rs 10 crore for breaking private placement regulations.
Two orders issued on April 3 by the Registrar of Companies, NCT of Delhi & Haryana, impose fines on Planify Capital and four persons, as well as Mayasheel Retail India Pvt Ltd (Bazar India) and five individuals.
Section 42 of the Companies Act, 2013, which deals with the issue of securities through the private placement route, is the reason the organizations are being sued.
Planify Capital and four people have been fined a total of Rs 7 crore. A fine of around Rs 2.89 crore has been levied against five persons and MayaSheel Retail India.
It was discovered that the organizations sought investors for the private placement of securities by using the crowdsourcing website “Planify.”
According to the Rules of Civil Procedure, Planify Capital Ltd., a fintech company, is the owner and operator of the Planify platform. Its primary goal is to create an online marketplace for private equity and to buy and sell unlisted equity shares.
According to a person with knowledge, both businesses operated in the same way. According to the official, they first assigned shares to Planify Capital or a group firm, and then they used the internet platform to sell the securities on the open market.
A firm conducting a private placement offer is not allowed by the Companies Act to issue securities to more than 200 people overall during a fiscal year.
Additionally, a business that issues securities through a private placement should refrain from using any media, marketing, distribution, agency channels, or public promotions, to educate the public about the offering. These clauses are covered by the Companies Act of 2013 Section 42.
The ministry has begun taking legal action against organizations that break corporate law and engage in illicit fundraising.
