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Stock market regulator SEBI has strongly reprimanded JM Financial in the matter of Western Carrier’s IPO. Five lakh 40 thousand equity shares were issued in this IPO of Rs 400 crore. SEBI has issued this administrative warning to JM Financial for not providing regulatory information during the IPO of its client Western Carrier. Investment banking firm JM Financial gave this information to the stock exchange on Friday. As soon as the information became public, it had a negative impact on the shares of JM Financial. Its shares fell 2.3 percent to Rs 129.90 in NSE.
Increase share capital after public issue
SEBI has found that the approval to increase the authorized share capital of Western Carrier was given in the board of directors meeting on September 15, whereas the issues of this logistics solution providing company were already issued for subscription on September 13. Shareholders’ approval on this was taken by calling an extraordinary meeting on 16 September. SEBI has written in its letter that to increase the authorized share capital, both these approvals should be taken before the issue and not after.
Both JM Financial and Kotak Mahindra were the book running lead managers of this IPO. In the letter sent by the regulator on January 1, it has been written that after the opening of the subscription issue, there was a shortfall in the authorized share capital of the company. Both the book running lead managers failed to tell this earlier. Approval for increased authorized share capital was taken thereafter.
SEBI took non-compliance seriously
SEBI has taken a serious view of this regulatory non-compliance of JM Financial as the book running lead manager. Both have been instructed to desist from being careless in future. Also, care has been taken to increase the compliance standards. A warning has also been given of strict action if such irregularities occur in future.
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