Markets regulator Sebi has ordered three companies and their directors to refund investors’ money, which they illegally raised by issuing securities without complying with the public issue norms.
Moreover, the firms — Bishal Distillers, Bishal Agri-Bio Industries and Bishal Horticulture and Animal Projects — have also been barred from the capital markets for four years.
A Securities and Exchange Board of India (Sebi) probe found the firms had mobilised funds by issuing redeemable preference shares (RPS) to more than 49 persons without complying with the public issue norms.
While Bishal Distillers had raised funds to the tune of Rs 4 crore, Bishal Agri-Bio Industries and Bishal Horticulture and Animal Projects had mobilised Rs 3 crore and Rs 2.84 crore, respectively.
The funds were mobilised by the firms between 2006-2012.
Bishal Distillers had issued shares to 238 persons, Bishal Agri-Bio Industries to 284 and Bishal Horticulture and Animal Projects to 3,487.
Since the shares were issued by the firms to more than 49 people, it qualified as a public issue that requires compulsory listing on recognised stock exchanges, which they failed to do.
Among others, it was also mandatory for the firms to bring out a prospectus with respect to the public issue.
In three separate and similarly-worded orders, Sebi has asked the companies and their directors to refund the money along with an interest of 15 per cent per annum.
Besides, the firms and their directors have also been restrained and prohibited from buying, selling or otherwise dealing in the securities markets for four years and the ban will continue till the completion of refund to investors.
In case the companies fail to comply with the orders in three months, Sebi would make a reference to state government or local police to register a case against them for fraud, cheating and misappropriation of public funds.
Besides, the regulator would also make a reference to the Ministry of Corporate Affairs to initiate appropriate action.