ROC Delhi & Haryan Slaps cr Penalty on a Company that “crowdsourced”equity capital :Independent Directors also fined
It’s illegal to raise equity capital from more than 50 individuals through private placement as per extant Indian law. But what if Company A raises that capital from only one investor (Company B) which then “transfers” those shares to more than 50 individuals?
Here is an order by ROC Delhi & Haryana punishing the act of raising of equity capital by circumventing the law. One may note that the order is a step ahead in “creativity”.
The case is related to the Gurugram-based fintech company misusing its tech platform to indirectly sell shares of its parent company and affiliate, violating the Companies Act, 2013.
The company used various marketing tactics, including YouTube videos and advertorials on popular news portals, to attract investors.
Even the valuation report is wildly misleading – valuing a company incorporated in 2021 based on older financial numbers of another company!!
Not only the company but also its directors were slapped with a penalty, aggregating to ₹7 Crores. Even the Independent Director was found to be complicit
