The Securities and Exchange Board of India (SEBI) has prohibited merchant banker First Overseas Capital Limited (FOCL) from participating in the securities market for two years and imposed a penalty of ₹20 lakh due to repeated regulatory violations. This decision follows two inspections: one conducted in August 2022 examining activities from April 2021 to March 2022, and the other in February 2024 covering the period from April 2022 to October 2023.
The inspections uncovered several significant breaches, including underwriting commitments that exceeded the company’s net worth by more than 20 times, involvement in non-securities market activities, and failure to maintain the required minimum net worth of ₹5 crore. Additionally, SEBI accused FOCL of taking deposits from the public to meet these commitments, a clear violation of merchant banking regulations. The company also failed to submit half-yearly reports, provided misleading information, and did not ensure that its key managers held valid National Institute of Securities Markets (NISM) certifications.
Despite warnings from SEBI in 2022 and 2023, FOCL did not address these issues. The firm was found to lack complete disclosures on its website, omitting crucial details such as issue types, subscription levels, Qualified Institutional Buyer (QIB) holdings, issuer financials, price data, and the utilization of issue proceeds, contravening SEBI’s disclosure norms for public issues.
SEBI’s scrutiny intensified after the Securities Appellate Tribunal (SAT) instructed it to review compliance issues, revealing that FOCL had not fulfilled the net worth requirement since the fiscal year 2018–19. According to SEBI, these continuous compliance failures posed potential risks to clients and investors.
As part of the order, FOCL is barred from accepting any new issue management assignments for two years. The company must pay the ₹20 lakh fine within 45 days and is also required to close all outstanding derivative positions within three months.
Original Source: https://theshillongtimes.com/2025/10/23/sebi-bans-first-overseas-capital-for-two-years-fines-rs-20-lakh-for-rules-violations/
Category: NATIONAL,News Alert
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Publish Date: 2025-10-23 21:12:00
