SEBI Bans Agri-Investment Platfrom Growpital From Collecting Money From Investors, Restricts Related Entities From Securities Market

SEBI also instructed the entities to cease and desist from providing any collective investment scheme (CIS) directly or indirectly, and gathering money from partners or investors via existing schemes

Issuing the instructions via an interim order passed on Monday, the regulator also said that these directons would stay in force until further notice

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The Securities and Exchange Board of India barred Farm Tech Silo LLP from collecting money from investors till further notice. The regulator banned the agri-investment platform, also known as Growpital, along with related entities and their directors from gathering money and also placed a curb on them from the securities market till further directions.

The move came as part of the regulator’s efforts to restrict unauthorised investment schemes, reported PTI. SEBI also instructed the entities to cease and desist from providing any collective investment scheme (CIS) directly or indirectly. It also restricted them from gathering money from partners or investors via existing schemes. 

Issuing the instructions via an interim order passed on Monday, the regulator also said that these directons would stay in force until further notice. The markets regulator informed that in its investigation, it found Growpital to be a platform offering several investment plans to the public in the agricultural sector. The platform also claimed to provide fixed tax-free profits ranging from 11 per cent to 14 per cent via the investments made in the sector. 

The regulator revealed that when an investor invests via the Growpital platform, they become a partner in a Limited Liability Partnership (LLP), and the invested capital is considered a capital contribution to the LLP. Further, SEBI found that several LLPs were incorporated for this purpose, prefixed with the name of ZF Project, such as ZF Project 1 LLP,  ZF Project 2 LLP, and  ZF Project 3 LLP. 

“As per the bank statement of Growpital, over Rs 184 crore has been mobilised from various sources as of December 31, 2023. The activities of Growpital...show that prima facie a CIS is being operated. However, no material is available on record to indicate that any of the entities involved in the instant arrangement has formed a Collective Investment Management Company that has obtained a certificate under CIS Regulation,” the regulator informed. 

It noted that the capital raised in the Growpital escrow account worth over Rs 184 crore is indicative of the level of the possible threat of investors getting attracted towards unregistered investment activities being carried out by entities. 

Amarjeet Singh, SEBI Whole Time Member, stated, “In order to ensure that additional funds are not mobilised through the Growpital platform under its scheme/arrangement/plans and to safeguard the assets acquired from the funds of the investing public until full facts and materials are brought out and final decision is taken in the matter, I am of the view that pending completion of the detailed examination initiated by Sebi, there is a need to pass an ad-interim ex-parte order to protect the interests of investors at large.”

Raising concerns about the implications of such unregulated entities, Singh added, “If an ex-parte ad interim order is not passed at this stage, many prospective investors may get lured with the promise of assured returns and potentially part with large contributions resulting in irreparable injury to them. The upcoming plans as disclosed by Rituraj Sharma, including a 'pre-IPO' equity funding round, raise additional concerns that other potentially unregulated activities may be undertaken in future.”

As such, SEBI has also barred Farm Tech Silo LLP, also known as Growpital, ZF Project LLP 1, ZF Project LLP 2, ZF Project LLP 3, Yotta Agro Venture Private Limited along with the directors or designated partners of these entities, namely Rituraj Sharma, Gayatri Rinwa, and Krishna Sharma. 

The regulator said that the entities have also been prohibited from diverting any funds raised from partners or investors. Further, Cashfree Payments India has also been instructed to not accept any payments made via Growpital or on behalf of Growpital.