Key Takeaways
- • SAT Upholds BSE Rejection: The Securities Appellate Tribunal dismissed Jetking Infotrain Limited's appeal, affirming the Bombay Stock Exchange's decision to reject the listing of shares issued through preferential allotment, with no monetary penalties imposed but shares remaining unlisted.
- • Ultra Vires Determination: The tribunal ruled that Jetking's preferential fundraise and subsequent virtual digital asset (VDA) investments conducted before formal amendment of its Memorandum of Association violated corporate governance requirements and exceeded the company's authorized objects.
- • MoA Amendment Timeline Issue: Jetking amended its MoA in September 2024 (RoC-approved November 4, 2024) to permit crypto/digital asset dealings as incidental to its core business, but the tribunal found these activities were conducted before proper authorization, creating compliance violations.
- • Fundraise and VDA Deployment: The company received in-principle BSE approval on May 9, 2025, for preferential equity issuance, obtained proceeds in May 2025, and subsequently purchased VDAs on CoinDCX—all actions the tribunal deemed unauthorized under the company's original corporate charter.
- • Regulatory Precedent on Crypto Treasury Activities: The ruling establishes that Indian regulators will not permit listing of securities issued to fund speculative cryptocurrency investments unless proper constitutional amendments precede fundraising and deployment activities.
Summary
The Securities Appellate Tribunal has upheld the Bombay Stock Exchange's rejection of Jetking Infotrain Limited's application to list shares issued through preferential allotment, ruling that the company's cryptocurrency investments were undertaken without proper authorization under its Memorandum of Association. A coram comprising Presiding Officer Justice P.S. Dinesh Kumar and Technical Members Meera Swarup and Dr. Dheeraj Bhatnagar determined that Jetking's preferential fundraise and all subsequent virtual digital asset (VDA) investments constituted ultra vires acts—exceeding the scope of powers granted by the company's corporate charter at the time those actions occurred.
The factual sequence reveals a governance timing issue central to the tribunal's decision. Jetking, an IT and network training institute operator, modified its MoA in September 2024 to authorize dealings in crypto and digital assets, but only as activities incidental to its primary business operations. The Registrar of Companies formally approved this amendment on November 4, 2024. Approximately six months later, on May 9, 2025, the BSE granted in-principle approval for Jetking to issue equity shares on a preferential basis to identified investors. The company received the fundraising proceeds in May 2025 and deployed them to purchase VDAs on the CoinDCX exchange platform. When Jetking subsequently applied for listing of these preferentially allotted shares, the BSE rejected the application, prompting the company's appeal to SAT.
Jetking's defense hinged on the contention that the November 2024 MoA amendment already authorized VDA investment and trading activities. The company argued that a second amendment approved by the RoC on July 7, 2025, merely expanded the scope of existing VDA authorizations rather than introducing new powers. The BSE countered that the first amendment addressed only matters incidental to the company's existing core business objectives and did not authorize standalone VDA business operations. The tribunal sided with the BSE's interpretation, finding that the preferential fundraise and VDA purchases had occurred before the company possessed proper constitutional authorization for such activities.
The tribunal's ruling carries implications for Indian listed companies seeking to deploy capital into digital assets. The decision establishes that regulatory authorities will scrutinize the temporal sequence between corporate charter amendments and capital deployment, requiring companies to obtain formal authorization before—not after—undertaking cryptocurrency investments or fundraising tied to such activities. While no monetary penalties were imposed, the shares from Jetking's preferential allotment remain unlisted, effectively denying the company access to public market liquidity for this fundraising round.
The factual sequence reveals a governance timing issue central to the tribunal's decision. Jetking, an IT and network training institute operator, modified its MoA in September 2024 to authorize dealings in crypto and digital assets, but only as activities incidental to its primary business operations. The Registrar of Companies formally approved this amendment on November 4, 2024. Approximately six months later, on May 9, 2025, the BSE granted in-principle approval for Jetking to issue equity shares on a preferential basis to identified investors. The company received the fundraising proceeds in May 2025 and deployed them to purchase VDAs on the CoinDCX exchange platform. When Jetking subsequently applied for listing of these preferentially allotted shares, the BSE rejected the application, prompting the company's appeal to SAT.
Jetking's defense hinged on the contention that the November 2024 MoA amendment already authorized VDA investment and trading activities. The company argued that a second amendment approved by the RoC on July 7, 2025, merely expanded the scope of existing VDA authorizations rather than introducing new powers. The BSE countered that the first amendment addressed only matters incidental to the company's existing core business objectives and did not authorize standalone VDA business operations. The tribunal sided with the BSE's interpretation, finding that the preferential fundraise and VDA purchases had occurred before the company possessed proper constitutional authorization for such activities.
The tribunal's ruling carries implications for Indian listed companies seeking to deploy capital into digital assets. The decision establishes that regulatory authorities will scrutinize the temporal sequence between corporate charter amendments and capital deployment, requiring companies to obtain formal authorization before—not after—undertaking cryptocurrency investments or fundraising tied to such activities. While no monetary penalties were imposed, the shares from Jetking's preferential allotment remain unlisted, effectively denying the company access to public market liquidity for this fundraising round.
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