Trading in Bharat Global Developers stock can resume on certain condition: Sebi

With an aim to protect the interests of investors, markets regulator Sebi on Wednesday allowed trading in the shares of Bharat Global Developers Ltd (BGDL) with the condition to disclose key financial numbers including sales, purchases and profit for the financial year 2024-25 before April 15.

Sebi, through an interim order in December, suspended trading in Bharat Global Developers for financial misrepresentation, misleading disclosures, price manipulation, and offloading shares at inflated prices. Additionally, it had put several restrictions on the company and its officials.

In its confirmatory order on Wednesday, Sebi directed BGDL to disclose key financial numbers including sales, purchases, profit and net worth for the financial year 2024-25 to the exchange before April 15.

Two days after such dissemination, trading in shares of BGDL can resume, Sebi said in its confirmatory order.

The latest order came after several investors lodged complaints that their investments are stuck, as the suspension of trading in shares of BGDL prevents them from liquidating their investment or exiting the stock.

The company had 60,950 public shareholders as per disclosures of shareholding pattern on the BSE website for the quarter ended December 2024.

"I deem it fit to decide in the interest of investors that trading in the shares of BGDL can resume two days after the company comes out with its provisional financial numbers and/ or key financial numbers including sales/purchases/gross profit/net profit/networth for the FY 2024-25, which must be disseminated on the exchange before April 15, 2025," Sebi Whole Time Member Ashwani Bhatia said.

However, Sebi noted that the company failed to submit any concrete evidence of genuine business activities undertaken by it so far which could justify its financial statements or the disclosures made regarding high-value contracts to stock exchanges.

It failed to make a case for modification of interim directions issued in the matter.

Accordingly, the regulator said that the restriction imposed on 18 entities including its managing director Ashok Kumar Sewada and CEO Mohsin Shaikh, to prevent them from dealing in shares or liquidating their shareholding in the company in any manner whatsoever, will continue till further orders.

Additionally, the regulator has extended the time by three months till June 30, 2025 to complete the investigation in the matter in view of the need to examine the change in management and obtain the noticees' response regarding other aspects of the allegations made in the interim order.

Also, Sebi directed BSE to actively monitor the nature of disclosures being made by the company, and seek disclosure of supporting documents in respect of any announcement or disclosure being made by the company.

Further, the exchange has been asked to ensure that the company issues a disclosure that it is unable to produce supporting evidence regarding the statements made earlier on contracts with TATA Agro & Consumer Products, UPL Agro and McCain India Agro.

Besides, Sebi said that the company will not be permitted to effect the stock split and bonus issue approved by its then board of directors on November 12, 2024 and shareholders on December 12, 2024.

Apart from suspension, Sebi, through its interim order, had barred 18 entities including preferential allottees, from the securities market.

This came after the Securities and Exchange Board of India (Sebi) initiated an investigation into Bharat Global Developers following social media posts and a complaint on December 16, 2024.

The inquiry was triggered by a dramatic 105-fold increase in BGDL's share price, which surged from Rs 16.14 in November 2023 to Rs 1,702.95 in November 2024.

In its probe, Sebi had found that BGDL replaced its management, approved preferential allotments to select individuals, and issued false disclosures about business expansion and partnerships.

These actions were part of a scheme to manipulate share prices and allow insiders to sell shares at artificially high prices.

The company had portrayed itself as a successful company with large contracts and technological expertise, none of which was true. This misrepresentation attracted unsuspecting investors and inflated the share price.