Regulator Sebi has asked Shreebhumi Constructions Ltd (SCL) and its directors to refund the money that the company had collected illegally from investors, and barred them from the markets for at least four years.
According to Sebi, the company had allotted redeemable preference shares (RPS) worth Rs 1.95 crore to 241 people in 2011-12 and 2012-13.
Since these shares were issued to more than 50 investors by the company, this qualified to be a public issue, which requires compulsory listing on recognised stock exchanges. Among others, the firm was also required to file prospectus, which it failed to do.
"I am of the view that SCL engaged in fund mobilising activity from the public, through the offer of RPS and has contravened the provisions of .... the Companies Act," Sebi Whole Time Member Madhabi Puri Buch said in an order dated May 4.
Accordingly, Sebi has asked the firm and its directors - Shubhranshu Singh, Chhotrai Majhi, Prabin Dash - to jointly refund the money raised from investors along with an annual interest of 15 per cent.
The company and its directors have been restrained from the securities markets "till the expiry of four years from the date of completion of refunds to investors".
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Further, the directors have been prohibited from associating themselves with any listed public firm or any registered intermediary, till completion of the refund and for a further four years from the date of completion of the repayment.
In case they fail to comply with the directions of refund on the expiry of three months, the Securities and Exchange Board of India (Sebi) may initiate recovery proceedings.
Sebi, through an interim order passed in June last year, had barred the company and its directors from accessing the securities market.