WHISTLE BLOWN BY THE INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD

WHISTLE BLOWN BY THE
INDEPENDENT DIRECTOR OF FIVE CRORE ELECTRONICS LTD

PROMOTORS OF FIVE CORE
ELECTRONICS Limited (FCEL) ARE BARRED FROM PARTICIPATION IN THE SECURITY MARKET
ACTIVITIES

SEBI has received
certain complaints against Five Core Electronics Limited (FCEL), which are as
under:

(a) Letter dated May 05,
2019 from one Aditya Agarwal, then Independent Director of the company
intimating his resignation from the said post on account of 'unethical
behaviour and practice of the management'.

(b) Letter dated August
09, 2019 from the Ministry of Corporate Affairs (“MCA”) forwarding therewith
complaint of one Anand Lakhotia (“The Complainant”), Director of Acepro
Advisers Pvt. Ltd.

(c) Letter dated August
20, 2019 from Economic Offences Wing forwarding the complaint of Anand Lakhotia

The gist of the
allegations in these complaints is as under:

(a) Mis-utilization and
mis-appropriation of Initial Public Offer (“IPO”) proceeds amounting to INR
46.66 Crore;

(b) Resignation by all
KMPs and directors of the company;

(c) No business activity
carried out by the company; the registered office of the company is also
closed;

(d) Non-availability of
the Managing Director (MD) and other non-executive directors (NEDs) since
February 2019 and

(e) Investigations
carried out by Director of Revenue Intelligence (DRI)

The complaints were
forwarded by SEBI to NSE for examination of the aforesaid allegations with
respect to provisions of SEBI (LODR Regulations). In response, NSE vide email
dated November 18, 2019 inter alia submitted that it had conducted an analysis
on functioning of the company and undertaken suspension of company based on the
same.

SEBI's preliminary
observations are as under

(a) Failure to make
announcements on the exchange website in line with Regulation 30 of LODR
Regulations

(b) Non-compliance with
other provisions of the LODR Regulations

(c) Mis-utilization of
funds and Intent to defraud the investors

SEBI found that
promotors have prima facie violated the provisions of Regulation 3(d) of the
SEBI (PFUTP) Regulations, 2003 read with Section 12A(c) of the SEBI Act, 1992

In view of the
foregoing, in order to protect the interest of investors and the integrity of
the securities market, WTM in exercise of the powers conferred upon them under
Section 19 read with Sections 11, 11(4) and 11B of the SEBI Act, 1992, hereby
issue the following directions:

(a) The Noticee nos. 1
to 7 are restrained from accessing the securities market and are further
prohibited from buying, selling or otherwise dealing in securities in any
manner whatsoever, either directly or indirectly, till further orders.

(b) The Noticee nos. 1
to 7 are restrained from being associated with any intermediary registered with
SEBI or any listed entity or its material unlisted subsidiary, till further
orders.

(c) The Noticee nos. 1
to 7, are restrained from disposing, selling or alienating, in any other
manner, their assets or divert funds, till further orders.

(d) NSE shall appoint an
independent Auditor/ Audit Firm for conducting a detailed forensic audit of the
books of accounts of the company to confirm mis-utilization of IPO proceeds by
the company. Such appointment of forensic auditor shall be done within 30 days
of this order.

(e) The Noticee nos. 1
to 7 shall extend necessary co–operation to the independent Auditor/Audit Firms
appointed as per this Order and shall furnish all information/documents sought
from them from time to time.

(f) The independent
Auditor/ Audit Firm so appointed as per this Order shall submit a Report to
SEBI through NSE within 3 months of date of its appointment.