Sebi on Thursday barred Gretex Corporate Services from taking up new merchant banking assignments for 21 days, citing lapses in maintaining regulatory net worth requirements and inadequate due diligence in a public issue.
The regulator said Gretex failed to maintain the prescribed minimum net worth of Rs 5 crore during the financial year 2019–20, thereby violating merchant bankers' rules.
Sebi also found that Gretex did not exercise adequate due diligence while managing the SME public issue of a company. Nearly 40 per cent of the IPO proceeds were earmarked for leasing office space that was still under construction, which the regulator said was not properly verified or disclosed to investors.
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