Here is the latest on the stalled Trafiksol IPO- Market regulator Securities and Exchange Board of India (SEBI) has cancelled the IPO and has directed the company to refund the money raised via the issue. It has further stated that the interest accrued should also be refunded to the investors proportionately.

It has gone on to state that Trafiksol may consider a fresh issue after the conclusion of the current proceedings by SEBI.

SEBI’s Whole-time Member Ashwani Bhatia stated in the 16-page order that, “In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11, 11(1), 11(4) and 11B and regulation 296 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, hereby issue the following directions:

a)Trafiksol is directed to refund the money paid by the investors,who have been allotted shares in the Initial Public Offering

b)BSE in coordination with the Bankers to the issue shall oversee the refund process which shall be completed within one week from the date of this Order in the matter of Trafiksol ITS Technologies Ltd. The interest earned on the issue proceeds pursuant to the directions in the Interim Order shall be proportionately refunded to the investors;

c)Once the money is credited to the bank account of the applicants, the depositories are directed to transfer the shares of the Company which have been allotted pursuant to the IPO, to a separate demat account opened in the name of the Company;

d)The Company is directed to take appropriate steps for cancelling the shares which have been so transferred to the account mentioned above by the depositories.”

Trafiksol listing stayed on September 17 and SEBI issued interim order

Just to remind our readers, the listing of the issue was stalled on September 17 after SEBI and BSE received complaints from Small Investors’ Welfare Association, SIREN. It alleged that the objectives of the “aforesaid issue included purchase of software valued at Rs 17.70 crore from a vendor which, inter alia had questionable financials and failed to file its annual financial statements with the Ministry of Corporate Affairs.” In view of the above complaint, BSE in consultation with SEBI deferred the listing of the shares.

SEBI passed an interim order after this dated October 11, directing an investigation to be undertaken by SEBI in the matter. The Interim Order also directed BSE to maintain the proceeds of the issue in an interest bearing account till further directions. Investigation was carried out in the matter and a report dated November 11 was submitted. The major findings included-

a. Intent of diversion of funds through misleading objects of the issue.

b.Misstatement of Financial Statements disclosed in Prospectus.

c.Concealment of material fact in the Prospectus

Trafiksol IPO details

The company had filed its DRHP with BSE on May 31 and the issue was open between September 10-12. The IPO involved fresh issuance of 64.10 lakh equity shares and the issue price was set between Rs 66-70 a share. The offering was oversubscribed 345.65 times and the company raised Rs 44.87 crore through the issue. The basis of allotment for the IPO was finalized on September 13 and the shares were credited to eligible applicants on September 16. The listing was scheduled for September 17 but was stalled after receiving complaints.