What Led SEBI to Ban First Overseas Capital for Two Years and Impose a ₹20 Lakh Fine?
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Synopsis
In a significant regulatory action, SEBI has suspended First Overseas Capital Limited for two years and imposed a hefty fine due to multiple violations. Discover the details of these infractions and their implications for the company and the market.
Key Takeaways
- SEBI's regulatory actions are crucial for market integrity.
- First Overseas Capital Limited faced multiple violations.
- The company has two years to rectify its compliance issues.
- Financial penalties are a deterrent against future violations.
- Investors should stay informed about regulatory developments.
New Delhi, Oct 23 (NationPress) The Securities and Exchange Board of India (SEBI) has imposed a two-year ban on merchant banker First Overseas Capital Limited (FOCL) from participating in the securities market. Additionally, a penalty of ₹20 lakh has been levied due to persistent regulatory infractions.
SEBI's decision follows two inspections: the first in August 2022, covering the period from April 2021 to March 2022, and the second in February 2024, which looked into the period from April 2022 to October 2023. Numerous violations were identified, which included underwriting commitments exceeding 20 times the company's net worth, involvement in non-securities market activities, and failure to maintain the mandated minimum net worth of ₹5 crore.
In a serious breach of merchant banking regulations, SEBI alleges that FOCL solicited deposits from the public to meet these underwriting commitments. Furthermore, the firm neglected to submit half-yearly reports, provided misleading information, and failed to ensure that its key managers held valid NISM certifications.
Despite receiving multiple warnings from SEBI in 2022 and 2023, FOCL did not rectify these issues. The company also presented incomplete disclosures on its website, omitting crucial information such as issue type, subscription levels, QIB holdings, financial data of issuers, price information, and the use of issue proceeds, in violation of SEBI's public issue disclosure regulations.
Following directives from the Securities Appellate Tribunal (SAT), it was revealed that FOCL had not met the net worth requirement since FY2018-19. SEBI emphasized that these ongoing infractions posed potential risks to clients and investors.
As part of the ruling, SEBI has prohibited FOCL from accepting any new issue management assignments for a period of two years. The company is required to pay the ₹20 lakh fine within 45 days of receiving the order and must close all outstanding derivative positions within three months.
Point of View
We stand firmly with the regulatory authority's decision to ensure market integrity. The actions taken against First Overseas Capital Limited are crucial for protecting investors and maintaining trust in our financial systems. The enforcement of strict compliance measures reinforces the commitment to uphold standards in the securities market.
NationPress
23/10/2025
Frequently Asked Questions
Why was First Overseas Capital Limited banned?
First Overseas Capital Limited was banned by SEBI for repeated violations of regulatory norms, including excessive underwriting commitments and failure to maintain the required net worth.
What is the penalty imposed on FOCL?
SEBI has imposed a penalty of ₹20 lakh on First Overseas Capital Limited.
How long is the ban for FOCL?
The ban on First Overseas Capital Limited is for a period of two years.
What actions must FOCL take following the SEBI order?
FOCL must pay the ₹20 lakh fine within 45 days and close all open derivative positions within three months.
What are the implications of this ban?
The ban affects FOCL's ability to manage new issues, which could impact its business operations and reputation in the market.
