Regulator Sebi on Wednesday barred Transgene Biotek Ltd and its directors from securities market in a case related to fund diversion through global depository receipts by the firm.
Besides, Transgene will continue the measures to recall outstanding amount of USD 38.5 million and bring the money back into its bank account in India within a period of one year from the date of this order, Sebi said.
The regulator further directed the firm to continue to be restrained from the markets till the compliance of the direction and thereafter for an additional period of two years from the date of bringing back the money.
The directors - K. Koteswara Rao, Soma Sekhar Marthi and Narayana Murthy Penatalya - were also barred for a period of five years from the date of interim order. The three were directors at the time of norm violation.
Sebi had passed the interim order in November 2014.
The interim orders were passed after Sebi prima-facie found that Transgene Biotek transferred USD 29.92 million out of total GDR proceeds of USD 40.5 million, through a subsidiary "for undisclosed and ulterior purposes under the garb of consideration for technology transfer and for other reasons".
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After raising of funds, the money was first kept in a Switzerland-based bank and some parts were later transferred to other entities, including a subsidiary, in Hong Kong and Canada, among others.
The claims that Transgene used the GDR proceeds to acquire certain technology from Hong Kong-based Asia First Technologies Ltd were found by Sebi to be false and misleading in the initial probe.
In the final order on Wednesday, Sebi said that "Noticee no. 1 (Transgene) had devised a fraudulent scheme under which Transgene made two GDR issues, the proceeds of which were diverted by them in contrary to the utilization of GDR proceeds stated in the offering circular".
The Sebi noted that "as a part of said fraudulent scheme, Noticee no. 1 (Transgene) failed to inform the stock exchange of price sensitive information regarding entering into material service agreements, non-receipt of technology/services as per agreements, made false announcements at BSE regarding allotment of GDRs".
By doing so, it violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms and listing agreement regulations, Sebi said.
The directors were liable as the decision of GDR issues were taken at the time of their term in the office.
"Noticee no. 2 to 4 (directors) have been part of the fraudulent scheme.. thus have violated provisions of PFUTP," Sebi said.
The regulator has also barred Sristek Consulting Pvt Ltd, Deepak Mishra and Sampath Kumar Meesala from markets for three years for aiding Transgene in diverting the GDR proceeds.