Markets regulator SEBI on Thursday banned Midvalley Entertainment Ltd and its independent directors from the securities market for seven years for diverting initial public offer (IPO) proceeds worth over ₹50 crore and not making requisite disclosures in the prospectus.

Additionally, four other officials including the compliance officer and manager of accounts and finance have been barred from the securities market for varying time periods. SEBI conducted an investigation between January-February, 2011 to ascertain any irregularities with respect to the IPO made by the firm.

It was noted that out of ₹60 crore of IPO proceeds, the company had utilised only ₹3 crore towards the objects of the issue and diverted over ₹50 crore to its related entities. Midvalley also failed to make disclosures in the prospectus regarding directorship of Vasan Chidambaram, independent director, in two other entities.

“By not complying with the regulatory obligation of making true and complete disclosures, the company and its directors and the signatories to the RHP/Prospectus have misled the investors which is detrimental to the interest of investors in securities market,” SEBI said.

Accordingly, the entities have been restrained from accessing the securities markets. The senior officials have also been barred from holding any key managerial position during the period of restraint.

In a separate order, SEBI levied a fine of ₹15 lakh on VCG & Co and its partner Vishal Chandra Gupta, statutory auditor of Tarini International, for issuing an unqualified utilisation certificate certifying that the firm had utilised an amount of over ₹16 crore out of the IPO proceeds for the proposed objectives of the share sale.

However, the actual utilisation of IPO proceeds was significantly different from the certificate issued by VCG. The company had incurred only ₹211.40 lakh out of IPO proceeds for objects stated in the prospectus as against ₹1,630.98 lakh certified by the statutory auditor, SEBI noted.

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