Share issue from 17 years ago haunts HDB Fin IPO

ISSUING SHARES TO MORE THAN 50 PEOPLE IS CONSIDERED A PUBLIC ISSUE AND REQUIRES SEBI CLEARANCE

- Gopika Gopakumar & Anirudh Laskar

MUMBAI: The stock market regulator is examining a potential violation of the Companies Act by HDB Financial Services 17 years ago as the non-bank lender prepares for a $1.5 billion initial public offering (IPO), three people aware of the matter said.

The Securities and Exchange Board of India (Sebi) found that the lender in 2008 issued shares to more than 50 employees of its parent HDFC Bank through a private placement, one of the three people said. The regulator now plans to refer the matter to the Union ministry of corporate affairs (MCA), since this may constitute a violation of the Companies Act, the person said on the condition of anonymity.