July 20, 2001
PR No. 119/2001
ORDER AGAINST DSQ SOFTWARE LTD. (DSQ) AND SHRI DINESH DALMIA, MANAGING DIRECTOR OF DSQ
INVESTIGATION ENFORCEMENT & SURVEILLANCE DEPT.
Investigations are being conducted into the alleged market manipulations in certain scrips including DSQ Software Ltd. (DSQ). The investigations primafacie revealed that DSQ intended to acquire Fortuna Technologies Inc. of USA (Fortuna Technologies). Three companies (OCBs)viz. Technology Trust Limited, Softee Corporation Limited and New Vision Investment Limited, registered in Mauritius are stated to hold entire shareholdings of Fortuna Technologies.
It was agreed between Mr T.C.Ashok (person owning these three OCBs) and DSQ Software that DSQ would acquire the business of Fortuna Technologies and for this acquisition, DSQ agreed to allot to three Mauritius based companies 14 Million Equity shares of DSQ valued at Rs.959 Crores at the rate of Rs.685 per share on non-repatriable basis in Demat form .
Investigations were conducted into this. Investigations prima facie brought out that the deal was not genuine. On the basis of the following facts, SEBI is of the primafacie view that the deal relating to acquisition of Fortuna Technologies of USA against swap of 14 million DSQ shares is not genuine. (a) DSQ on non-repatriable basis to Companies incorporated in Mauritius in physical form, (b) out of the shares allotted in lieu of acquisition 10,00,000 shares were released to New Vision Investment Private Limited- an entity which was not connected with the transactions, (c) contradicting versions were given by the broker - Biyani Securities and New Vision Investment Private Limited as to the reasons for giving of shares to the broker, (d) non-availability of New Vision Investment Private Limited at the address given by it, (e) allotment of shares by DSQ to Mauritius based entities in physical form when specifically agreed that these would be issued in demat form, (f) non-disclosure of the facts of acquisition in a timely and transparent manner to the Stock Exchanges, (g) non completion of deal( shares were kept with common undisclosed custodian), (h) valuation of the Fortuna Technologies (target company agreed to take the shares of DSQ at the rate of Rs. 685/- when the market price was Rs. 200/- ), (i) issue of shares to New Vision Investment Private Limited of New Delhi when the Mauritius based entity was New Vision Investment Limited.
SEBI is of the prima facie opinion that conduct of the affairs of DSQ in this manner is likely to erode the investor confidence and integrity of the capital markets. Therefore, pending investigations into the affairs of DSQ and in the interest of market integrity and investor protection, SEBI has issued the following directions
These actions are without prejudice to any further action(s) which may be considered on the outcome of the findings of the investigations.
DSQ cancels this acquisition of Fortuna Technologies being done on swap basis after following the procedure laid down under the Companies Act. (a copy of this order has been separately sent to Dept. of Company Affairs to ensure compliance by the company )
DSQ is prohibited from accessing capital market for a period of one year or completion of investigation and action thereupon whichever is later.
Mr Dinesh Dalmia, Managing Director, DSQ is debarred from dealing in securities for a period of one year or completion of investigation and action thereupon whichever is later.
DSQ and Mr Dinesh Dalmia and / or their representatives have been given an opportunity of post decisional hearing. This Order will come into force with immediate effect.