Sebi bans three firms from raising money from public

Market regulator Sebi has barred three firms -Matribhumi Projects, Jugantor Realty and Waris Finance and Investment- and their directors from mobilising money from investors through the issuance of securities for allegedly violating public issue norms.

The move follows Securities and Exchange Board of India (Sebi) receiving complaints against these companies alleging non-repayment of amount in respect of Non-Convertible Secured Redeemable Debentures (NCDs).

Sebi found that Matribhumi Projects raised Rs 4 crore through issuance of NCDs in 2012-13, Jugantor Realty and Waris Finance raked in Rs 13.28 crore and Rs 5.12 crore, respectively between 2010-11 and 2011-12 through such issue. However, the number of allotees in these cases are not known.

The companies, through such activities, had allegedly violated various norms, Sebi said.

The regulator observed that allotment of NCDs by the firms were a public issue, which under the rules require a compulsory listing on a recognised stock exchange. It was also required to file a prospectus, among others, which they failed to do.

These companies are "engaged in fund mobilising activity from the public, through the offer of NCDs, and as a result of such activity has violated the provisions... Of the Companies Act," Sebi said in three separate interim orders.

Accordingly, Sebi has restrained the companies and its directors from mobilising any fresh "funds from investors through the offer of NCDs or through the issuance of equity shares or any other securities to the public, and/or invite subscription, in any manner whatsoever, either directly or indirectly till further directions".

Further, the firms and their directors have been barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.

They have been restrained from accessing the securities markets, Sebi said.

The capital market watchdog also asked the entities not to dispose any of the properties or assets acquired by that company without prior permission from the regulator as well as not to divert the funds raised from the public.

Also, Sebi has prohibited debenture trustees of these firms from continuing with their assignment in respect of NCDs issue of these companies. It also barred them from taking up any new assignment in a similar capacity till further directions.

This order "shall come into force with immediate effect and shall continue to be in force till further directions".