Easing the penal provisions for deemed public offers was ‘not an easy decision’ for the markets regulator, and there is no possibility of any further relaxations in this space, Sebi Chairman UK Sinha said on Tuesday.
Recently, Sebi board had decided that unlisted companies raising funds through securities without having a public offer document will be exempted from penal action if they provide a refund option along with 15 per cent interest rate at the time of issuance. The relaxation would be applicable on entities that have raised funds by issuing securities to more than 49 persons, but up to 200 individuals in a financial year. “Companies law has provided change from 50 to 200. It was not very easy for Sebi board to come to this decision. Because it has never in the past said that a particular type of offence will not be enforced. This is for the first time”, Sinha said at an event organised by Association of Investment Bankers of India (AIBI) here.
He noted that the board saw the legislative intent and “when the new law said 200 we said anyone who has gone up to 200 maybe by honest mistake we will permit them to return the money to the investors and close the chapter.”