Corporate Affairs Ministry Fines Two Companies, Nine Individuals For Violating Companies Law

Clamping down for illegal fundraising activities, the corporate affairs ministry has slapped fines totalling nearly Rs 10 crore on two companies and nine individuals as they violated private placement norms.

The fines have been imposed on Planify Capital and four individuals as well as on Mayasheel Retail India Pvt Ltd (Bazar India) and five individuals, according to two orders passed by the Registrar of Companies, NCT of Delhi & Haryana on April 3.

The action has been taken against the entities for violating Section 42 of the Companies Act, 2013, which pertains to the issuance of securities through the private placement route.

Fines totalling Rs 7 crore have been imposed on Planify Capital and four individuals. A total penalty of nearly Rs 2.89 crore has been imposed on MayaSheel Retail India and five individuals.

It was found that the entities used a crowdsourcing platform 'Planify' to reach out to investors for issuing securities through the private placement route.

Planify platform is owned and operated by Planify Capital Ltd, a fintech company that focuses on building an online marketplace for private equity as well as deals in sell-purchase of unlisted equity shares, as per the RoC.

An official in the know said the modus operandi of both companies were the same. First, they allotted shares to Planify Capital or its group company and later using the online platform, the securities were sold in the open market, the official added.

Under the Companies Act, a company making a private placement offer is not permitted to issue securities to more than 200 persons in aggregate in a financial year.

Also, a company issuing securities through the private placement route should not come out with any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public about the issue.

These provisions come under Section 42 of the Companies Act, 2013.

The ministry has been acting against entities violating the company law and indulging in illegal fundraising activities.