WHISTLE BLOWN BY THE INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD
Channel: R V Seckar
Date: 2020-07-25

WHISTLE BLOWN BY THE INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD 
PROMOTORS OF FIVE CORE ELECTRONICS Limited (FCEL) ARE BARRED FROM PARTICIPATION IN THE SECURITY MARKET ACTIVITIES 

SEBI has received certain complaints against Five Core Electronics Limited (FCEL), which are as under:

(a) Letter dated May 05, 2019 from one Aditya Agarwal, then Independent Director of the company intimating his resignation from the said post on account of 'unethical behaviour and practice of the management'. 

(b) Letter dated August 09, 2019 from the Ministry of Corporate Affairs (“MCA”) forwarding therewith complaint of one Anand Lakhotia (“The Complainant”), Director of Acepro Advisers Pvt. Ltd. 

(c) Letter dated August 20, 2019 from Economic Offences Wing forwarding the complaint of Anand Lakhotia 

The gist of the allegations in these complaints is as under: 
(a) Mis-utilization and mis-appropriation of Initial Public Offer (“IPO”) proceeds amounting to INR 46.66 Crore; 
(b) Resignation by all KMPs and directors of the company; 
(c) No business activity carried out by the company; the registered office of the company is also closed; 
(d) Non-availability of the Managing Director (MD) and other non-executive directors (NEDs) since February 2019 and 
(e) Investigations carried out by Director of Revenue Intelligence (DRI) 

The complaints were forwarded by SEBI to NSE for examination of the aforesaid allegations with respect to provisions of SEBI (LODR Regulations). In response, NSE vide email dated November 18, 2019 inter alia submitted that it had conducted an analysis on functioning of the company and undertaken suspension of company based on the same.

SEBI's preliminary observations are as under 

(a) Failure to make announcements on the exchange website in line with Regulation 30 of LODR Regulations 
# R V Seckar #
(b) Non-compliance with other provisions of the LODR Regulations 

(c) Mis-utilization of funds and Intent to defraud the investors

SEBI found that promotors have prima facie violated the provisions of Regulation 3(d) of the SEBI (PFUTP) Regulations, 2003 read with Section 12A(c) of the SEBI Act, 1992

In view of the foregoing, in order to protect the interest of investors and the integrity of the securities market, WTM in exercise of the powers conferred upon them under Section 19 read with Sections 11, 11(4) and 11B of the SEBI Act, 1992, hereby issue the following directions: 

(a) The Noticee nos. 1 to 7 are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further orders. 

(b) The Noticee nos. 1 to 7 are restrained from being associated with any intermediary registered with SEBI or any listed entity or its material unlisted subsidiary, till further orders. 

(c) The Noticee nos. 1 to 7, are restrained from disposing, selling or alienating, in any other manner, their assets or divert funds, till further orders. 

(d) NSE shall appoint an independent Auditor/ Audit Firm for conducting a detailed forensic audit of the books of accounts of the company to confirm mis-utilization of IPO proceeds by the company. Such appointment of forensic auditor shall be done within 30 days of this order. 

(e) The Noticee nos. 1 to 7 shall extend necessary co–operation to the independent Auditor/Audit Firms appointed as per this Order and shall furnish all information/documents sought from them from time to time. 

(f) The independent Auditor/ Audit Firm so appointed as per this Order shall submit a Report to SEBI through NSE within 3 months of date of its appointment.