Sebi has barred Corporate Capital Ventures from taking new assignments for one month after finding multiple compliance lapses by the merchant banker, including non-updation of IPO track records, failure to maintain due diligence records and misleading disclosure on office locations.
The order was passed by Sebi Whole Time Member Amarjeet Singh in the matter of Corporate Capital Ventures Private Limited, which is registered with the regulator as a merchant banker. The restriction will run for one month from the date of the order.
Sebi inspected the merchant banker for the period from April 1, 2021 to January 31, 2023 to check compliance with merchant banking rules, ICDR regulations, PFUTP norms, intermediaries regulations, certification rules, insider trading regulations and related circulars.
The regulator initially alleged several violations, including submission of forged or fake certificates during inspection, non-updation of track record on the website, non-compliance with NISM certification requirements, failure to submit true and correct information on a previous Sebi inspection, failure to upload investor charter and complaints data, non-use of designated email ID, failure to develop an internal code of conduct, failure to maintain a structured digital database and misleading information on office locations.
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A designated authority later found Corporate Capital Ventures guilty of six violations. These were non-updation of track record on its website, non-compliance with NISM certification requirements, failure to submit true and correct information related to an earlier Sebi inspection, failure to upload investor charter and complaints data and failure to respond to a test email, misleading disclosure on office locations, and failure to exercise due diligence and maintain records.
The designated authority had recommended that the merchant banker be prohibited from taking new assignments for one month.
Corporate Capital Ventures denied intentional wrongdoing and said several lapses were technical or caused by operational difficulties after the Covid period. It told Sebi that it had faced business disruption, replaced its old team and later corrected the deficiencies. It also said the IPO track records had been updated, investor charter and complaint details were uploaded, and NISM certifications were obtained after the inspection.
On the track record issue, Sebi said the firm had not updated details of IPOs handled by it, including Rudrabhishek Enterprises and Rajnandani Metal, on its website during the inspection period. The regulator noted that similar observations had been made in an earlier inspection and a deficiency letter was issued in February 2020. While Sebi accepted that Covid caused disruption, it said the firm had enough time after business resumed in July 2021 to fix the deficiency.
On NISM certification, Sebi found that key management personnel of the firm did not hold the required certifications during the relevant period. The order said Kulbhushan Parashar’s earlier certificate had expired on December 13, 2019, and he obtained the required Merchant Banking certification only on April 27, 2023. Harpreet Parashar, who became whole-time director on March 31, 2021, was required to obtain the certifications within one year, but obtained them only in 2023.
Sebi also found that Corporate Capital Ventures failed to disclose true and correct information about a previous inspection. The company had told Sebi there were no adverse findings and no observation letter in relation to an earlier inspection for April 2018 to September 2019. Sebi said a deficiency letter had in fact been issued on February 11, 2020. The firm described the omission as human error, but Sebi said it showed carelessness and lack of diligence.
