Business Standard

Friday, January 03, 2025 | 10:25 PM ISTEN Hindi

Notification Icon
userprofile IconSearch

Market regulator Sebi warns JM Financial of lapses in due diligence

The issue was noted when the BRLMs sent an email to Sebi requesting an update in the red herring prospectus (RHP) regarding the increased authorised share capital

SEBI

SEBI(Photo: Shutterstock)

Khushboo Tiwari Mumbai

Listen to This Article

The Securities and Exchange Board of India (Sebi) has warned investment banking firm JM Financial for certain lapses in due diligence during the initial public offering (IPO) of Western Carrier (India).
 
The administrative warning, dated January 1, points out that the book running lead managers (BRLMs) failed to exercise due diligence, as the shortfall in authorised share capital of the company came to the notice only after the opening of the issue for subscription.
 
Further, the approvals for the incremental authorised share capital were taken during this period.  
 
“The approval of board and shareholders for increase in authorised share capital was taken while the issue was already open for subscription. Ideally, the approvals for incremental authorised share capital should have been taken prior to opening of the issue and not after opening of the issue,” said Sebi in the letter.
 
 
The issue was noted when the BRLMs sent an email to Sebi requesting an update in the red herring prospectus (RHP) regarding the increased authorised share capital. The board of directors of Western Carrier had approved it in a meeting on September 15, 2024 while the IPO was already open for subscription from September 13. Further, the shareholders’ approval in the EGM was taken on September 16.  
 
“The above non-compliances have been viewed very seriously. The BRLMs are, therefore, advised to be careful in future and improve their compliance standards to avoid recurrence of such instances, failing which action may be initiated,” Sebi added.
 
The shares of JM Financial closed with a decline of over 2 per cent settling at ~130.25 apiece.
 
The offer structure of Western Carrier before the issue opened consisted of a fresh issue component of up to ~400 crore fresh issue and an offer for sale of up to 5.4 million equity shares.
 
Though the RHP was updated after the request, Sebi has asked the investment banker to take corrective steps.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jan 03 2025 | 4:50 PM IST

Explore News