Mumbai, March 21: The Securities and Exchange Board of India (SEBI) has cracked down on multiple companies for misappropriation of funds raised through rights issues in the stock markets, after receiving complaints from whistleblowers.

SEBI is reported to have initiated investigations against these companies for the alleged illegal diversion of funds by promoters to their relatives or front companies for personal use rather than the declared purpose for which the money was raised.

The capital markets watchdog is currently looking into four or five such entities and has discerned a pattern in the misuse of such funds. The issue is, therefore, also being taken up on a broader level.

Most of the cases relate to small and dormant companies which float a rights issue, in which shares are offered to existing shareholders at a discount to raise funds for further investment to expand the business. However, these funds are then diverted for personal use such as buying property.

Unlike pump and dump cases, fund diversion from rights issues does not have an immediate impact on the stock market. Hence, such misuse of funds is more difficult to detect and whistleblower complaints are the main source of information in unearthing the cases.

In an interim order passed on December 5, 2024, SEBI observed that Mishtann Foods Ltd. misused proceeds from its rights issue, transferring funds to promoters and group entities instead of their stated purpose. The company withdrew an initial Rs 150 crore rights issue and later issued smaller rights issues under Rs 50 crore, seemingly to avoid SEBI scrutiny.

The markets regulator has barred the company from raising public funds and prohibited the promoters from trading or accessing the capital markets.

Mishtann Foods was also asked to return Rs 49.82 crore misappropriated from its rights issue and Rs 47.10 crore diverted through fictitious transactions. To improve governance, SEBI has mandated the formation of a new audit committee to ensure strict compliance with regulations.

Additionally, BSE has been directed not to approve any further rights issues by the company. These directives will remain in force until further orders.

In another order passed on December 11, 2024, SEBI released an order against Debock Industries Ltd. The company was found to have engaged in financial misconduct, including manipulating its financial statements, submitting false bank statements, and siphoning off rights issue proceeds.

The company allegedly used fictitious preferential issues to migrate to the Main Board of the stock exchange. As a result, SEBI imposed strict restrictions, preventing the accused from dealing in securities or accessing the capital markets.

New Delhi: Goldprices maintained a rising momentum for the third consecutive session to reach another all-time high of Rs 89,796 per 10 grams on Thursday, following a firm trend in global markets.

On the Multi Commodity Exchange (MCX), the precious metal contracts for April delivery hit a record high of Rs 89,796 per 10 grams in the morning trade.

Later, the yellow metal pared its gains and was trading Rs 268 or 0.3 per cent higher from the previous close at Rs 88,870 per 10 grams, with a business turnover of 13,084 lots.

Investors continued their safe-haven asset purchasing following the US Federal Reserve’s constant stance on the interest rate, according to analysts.

Globally, gold futures touched a lifetime high at USD 3,065.09 per ounce in New York.

“Gold rallies to another historic high in international markets after the US Federal Reserve held interest rates steady as anticipated, but signalled a possible reduction in borrowing costs by half a percentage point by the end of this year,” Rahul Kalantri, VP of Commodities at Mehta Equities Ltd, said. Both dollar index and bond yields maintained at low also boosted gold prices, he added.

Mumbai, March 20: The Maharashtra government has intensified its scrutiny of Ola Electric stores over alleged trade violations, adding to the challenges faced by Bhavish Aggarwal-led electric vehicle (EV) maker

Officials from five regional transport offices inspected 26 Ola Electric stores in Mumbai and Pune to check for trade certificates, according to sources. As a result, authorities also confiscated a total of 36 Ola Electric scooters.

According to a report in NDTV Profit, until Tuesday, 10 Ola Electric stores in Mumbai were inspected and 10 scooters were impounded.

The latest action on Wednesday was taken following a complaint filed by Pritpal Singh and Associates, a Gurugram-based firm.

The complaint alleged that Ola Electric was setting up showrooms, stores, and service centres in Maharashtra using a single trade certificate, which is not permitted under the law.

An inspection report, signed by Deputy Transport Commissioner Ravi Gaekwad, confirmed the allegations, the report said.

Maharashtra’s Transport Minister, Pratap Sarnaik, has ordered immediate action on the complaint and asked for a report on the matter. Officials from four Mumbai RTOs and one Pune RTO carried out the inspections.

As per the Central Motor Vehicles Act, 1988, and Rule 33 of the Central Motor Vehicles Rules, 1989, vehicle distributors and manufacturers must obtain a business certificate to register vehicles.

Additionally, Rule 35 states that each showroom, dealership, or establishment engaged in selling or displaying vehicles must have a separate business certificate.

Failure to comply with these rules can result in penalties under Section 192 of the Motor Vehicles Act, 1988. This crackdown comes at a time when Ola Electric is already facing financial and legal troubles.

Last week, vendors Rosmerta Digital Services Private Ltd and Rosmerta Safety Systems Private Ltd moved to initiate insolvency proceedings against an Ola Electric subsidiary over unpaid dues of around Rs 25 crore.

These vendors were responsible for processing vehicle registrations and manufacturing high-security number plates for Ola Electric scooters.

However, the company has informed the stock exchanges about only one petition filed with the National Company Law Tribunal (NCLT) in Bengaluru.

Ola Electric is also under scrutiny for its reported sales figures. In February, the company claimed to have sold 25,000 scooters, but registration data suggests that only about a third of them were actually registered.