Type of Document: Press Release
Relevant Acts/Regulations: Companies Act, 2013, SEBI Act, 1992, SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
The Securities and Exchange Board of India (SEBI) has observed that unregistered online platforms are, among other things, offering unlisted debt securities to investors. These platforms seem to provide an opportunity for investors to purchase unlisted debt securities but operate without any regulatory oversight, lacking essential investor protection and grievance redress mechanisms. The public is strongly advised to exercise caution when engaging with such unregistered platforms. The activities of these platforms, or the issuers of the unlisted debt securities, violate the Companies Act, 2013, SEBI Act, 1992, SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, and SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. This breach arises because offering unlisted securities to more than 200 investors constitutes a “deemed public issue” under the Companies Act, 2013. Such activities may lead to legal, regulatory, or enforcement actions against the parties involved.
Recently, SEBI issued an interim order against some entities operating such unregistered platforms. The order is accessible at https://www.sebi.gov.in/enforcement/orders/nov-2024/interim-ex-parte-order-in-thematter-of-unregistered-online-bond-platforms_88552.html
Investors should consider utilising Online Bond Platforms operated by SEBI registered stock brokers authorised by the Bombay Stock Exchange (BSE) and/or the National Stock Exchange (NSE) to act as online bond platform providers (OBPPs) for investing in listed debt securities. The list of BSE and NSE authorised OBPPs can be found in the link https://www.sebi.gov.in/online-bond-platform-providers.html
SEBI has also invited Public to share details of any unregistered entities/ platforms offering unlisted debt securities via the Market Intelligence (MI) portal of SEBI at: https://mi.sebi.gov.in/
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