The directors are Nitin Sandesara, Chetan Sandesara, Rajbhushan Dixit, Vilas Joshi and Priyadarshan B Mehta.
The officials are facing debarment from the securities market in the periods ranging between 3 years to 5 years each.
The investigation period was September 01- October 31, 2003.
The company came out with the GDR issuance of 2.32 million amounting to $ 15.37 million on October 1, 2003, Sebi noted in an order passed on Tuesday.
Sebi found that the scheme of issuance of GDRs was fraudulent as the firm had entered into an account charge agreement with Banco Efisa Bank for a loan that was availed by Fresia Worldwide Ltd towards the subscription of GDR.
Besides, the account charge agreement was not disclosed to the stock exchanges.
The GDR proceeds were pledged as security against the loan.
“Sterling in connivance with Fresia devised a fraudulent scheme whereby Fresia received GDRs without paying any consideration for 80 per cent of the GDRs, at the cost of shareholders/investors of Sterling,” Sebi concluded.
Regarding the chairman and managing director of the firm, Nitin Sandesara and director Chetan Sandesara, Sebi said that they are also liable for the fraudulent scheme as they were fully involved in the day-to-day activities of the company.
“The directors, namely Vilas Joshi, P B Mehta, Narendra Patel and Rajbhushan Dixit, who even though were Non executive Independent Directors, had clear knowledge of the terms of the Credit Agreement and the Account Charge Agreement,” it added.
Sebi noted that Sterling is in liquidation and that Fresia Worldwide Ltd has been dissolved, thereby, proceedings against the two entities have been disposed of.
Through a separate order passed on Tuesday, Sebi exempted Resolute Enterprises Trust from the obligation of making an open offer following its proposed acquisition of shares and voting rights in
.
Pursuant to the proposed acquisitions, the trust would directly acquire 5.11 per cent shares and indirectly acquire 26.39 per cent shares and along with the promoter group, will hold an aggregate of 70.33 per cent paid up equity capital in the firm, Sebi noted.
The pre-acquisition and post-acquisition shareholding of the promoters will remain the same and there will also be no change in the public shareholding of the company.
The exemption granted by Sebi is subject to certain conditions, including that the proposed acquisitions should be in compliance with market other norms and other applicable laws.
