SEBI Bans First Overseas Capital for 2 Years, Fines ₹20 Lakh

The Securities and Exchange Board of India (SEBI) has barred First Overseas Capital Ltd (FOCL) from the securities market for 2 years and imposed a ₹20 lakh fine. The firm cannot take on any new IPO or corporate advisory assignments during this period.

SEBI’s Inspection and Findings

SEBI conducted 2 inspections, one in August 2022 covering April 2021 to March 2022, and another in February 2024 covering April 2022 to October 2023. The regulator found that FOCL’s underwriting obligations exceeded the allowed limit of 20 times its net worth. The company also accepted public deposits to meet these obligations, which violates merchant banking norms.

Gaps in Compliance

The inspections revealed that FOCL did not maintain the minimum net worth requirement of ₹5 crore and failed to submit half-yearly reports. It also had incomplete information on its website, such as missing details on issue types, subscription data, financials, and fund utilisation, all mandatory under SEBI’s disclosure rules.

False Information and Unrelated Business

SEBI noted that the firm submitted incorrect details about IPOs it managed and about its compliance officer. FOCL was also found to be involved in property development, an activity outside its registered scope. The company did not inform SEBI about acquiring securities of companies whose issues it handled.

Previous Warnings and Regulatory Action

FOCL had been warned by SEBI in 2022 and 2023, but the irregularities continued. The order, issued by SEBI Whole-time Member Amarjeet Singh, stated that the violations were ongoing despite repeated notices. FOCL has now been directed to close all open derivative positions within three months and pay the ₹20 lakh fine within 45 days.

SEBI’s order also referred to the Synoptics Technologies IPO, where funds from the issue were allegedly transferred to FOCL under the pretext of meeting issue-related expenses.

Read More: RBI Fixes ₹12704 as Final Redemption Price for 2017–18 Sovereign Gold Bonds (SGB) Series-IV!

Conclusion

SEBI’s order concludes a series of inspections that found repeated regulatory lapses by First Overseas Capital. The company now faces a two-year market ban and a ₹20 lakh penalty.

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