A SEBI order issued on Tuesday said that ample opportunities have been given to ace investor Shankar Sharma to provide the correct position of payments made to Brightcom Group Limited (BGL).

“However, he has failed to provide the same. Interestingly, one of the reasons for non-submission of payment details, cited by Shankar Sharma in his email dated August 15, is that ‘we have been constrained by the delay on part of the company to reconcile all the remittances’,” the order said.

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Shankar Sharma along with other allottees in the preferential allotment have been restrained from selling Brightcom shares.

Shankar Sharma was allotted 1,50,00,000 warrants (subsequently converted into shares on March 9, 2022), with a face value of Rs 2 each, at Rs 37.70 per share during the financial year 2021-22, for a total consideration of Rs 56.65 crore. The company claimed that it had received the total consideration of Rs 56.65 crore.

However, even after repeated reminders, BGL failed to provide documentary evidence of receipts of warrant/share application money from Shankar Sharma in its bank accounts, the SEBI order said.

It was observed that BGL had received Rs 25.7936 crore from Shankar Sharma. Subsequently, Shankar Sharma vide emails dated July 25 and July 26, 2023 informed SEBI that he paid Rs 14.19 crore towards warrant application money to BGL’s HDFC Bank account.

In this regard, he submitted copy of his bank account statement. However, in the said statements, all the particulars of the transaction, except the amount, were concealed by redaction, the SEBI order said.

Due to the same, the above payment could not be verified and the same is still under examination. Therefore, it appears that BGL has only received Rs 39.98 crore (including Rs 14.19 crore which could not be verified) as against total consideration due of Rs 56.6555 crore and has not received the entire share application money from Shankar Sharma and that BGL’s claims in this regard are false.

Further, while BGL claimed that total consideration of Rs 56.6555 crore had been received from Shankar Sharma between 29/10/2021 and 09/03/2022, BGL’s bank statements showed that Rs 25.7936 crore was transferred by Shankar Sharma to BGL between 11/07/2022 and 28/11/2022, the SEBI order said.

SEBI has also repeatedly tried to obtain information and supporting documents from Shankar Sharma regarding payments made by him to BGL in respect of the warrants/shares allotted. However, Shankar Sharma is yet to provide complete information and documents to SEBI.

Brightcom Group Ltd, M. Suresh Kumar Reddy (BGL’s promoter-cum CMD), and Narayan Raju (CFO) were involved in round-tripping of BGL’s own funds in a circular fashion to falsely portray receipt of consideration from allottees of preferential allotments and siphoning off of proceeds of preferential allotments, SEBI said in an order.

In the order, SEBI’s Wholetime Member Ashwani Bhatia said Brightcom’s CMD and CFO shall cease to hold the position of a director or a key managerial person in any listed company or its subsidiaries until further orders.

BGL shall place the order before its Board of Directors within seven days from the date of its receipt.

M. Suresh Kumar Reddy is hereby restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders, the SEBI order said.

“Noticees 3 to 25 in the order are hereby prohibited from disposing of shares of BGL held by them, directly or indirectly, in any manner whatsoever, until further order,” it said.

BGL is hereby directed to ensure that P. Murali & Co. and PCN & Associates, including their past and present partners, are not engaged with BGL or its subsidiaries in any capacity or manner whatsoever, until further order, it said.

The preferential allottees are hereby directed to co-operate in the ongoing investigation by SEBI with respect to preferential allotments, the order read.

SEBI received complaints dated October 6, 2022 and May 12, 2023 in respect of the preferential allotments made by Brightcom Group Limited in the financial years 2019-20 and 2020-21, alleging inter alia that BGL had raised money through preferential issue of shares to entities that were directly or indirectly connected to it, and that the money raised in the preferential issues was given as loans and advances to its subsidiaries.