Regulator Sebi has barred four companies of Moral Group and their directors from the capital markets for at least four years and asked them to refund the money raised from investors without complying with the public issue norms.
Besides, they have been restrained from associating themselves with any listed public company till the refund and a further period of four years from the date of completion of the refund to investors, Sebi said in an order dated October 31.
These four companies are -- Moral Devcon Ltd, Moral Health & Personal Care Ltd, Moral Commotrade Ltd and Moral Infrastructure Ltd -- and their directors -- Arun Kumar, Ajay Kumar Sharma and Gyaneshwar Sharma.
Sebi noted that these four companies raised a total of about Rs 16 crore by issuing non-convertible debentures (NCDs) during 2010 to 2014 to over 25,000 investors.
The securities were issued to more than 50 people by each company and accordingly the offer of NCD qualified to be a public issue and required compulsory listing of the securities on a recognised stock exchange. However, the firms did not comply with the provision.
Among other requirements, the firms were to register a prospectus with the Registrar of Companies (RoC) under the Companies Act, which it failed to do.
However, these firms claimed to have already paid a total amount of about Rs 20 crore (including interest).
In their submission to Sebi, the companies claimed to have "refunded all the money collected by way of the debentures to the investors and that the process of refund was completed by March 31, 2014".
The Securities and Exchange Board of India (Sebi) said that these firms have "failed to establish that they have made refund to all the NCD holders, as claimed by them".
Accordingly, in an order, Sebi has asked the companies and their directors to refund the money collected by the firms from investors with an annual interest of 15 per cent within a period of 90 days.
Within seven days of completion of refund, they have been directed to file a report of such completion with Sebi certified by two independent chartered accountants.
In case these entities fail to comply with the order, Sebi may recover such amounts in accordance with provisions of securities laws.
Besides, Sebi has prohibited Santu Kumari, debenture trustee of Moral Debenture Trust, from accessing the securities markets for one year.
Further, the regulator said Moral Capital Services, another firm belonging to Moral Group, has falsely claimed to be a sub-broker, depository participant and portfolio manager without obtaining registration from Sebi in such capacities.
Moral Capital Services and its directors -- have been "cautioned and advised" to refrain from representing Moral Capital Services as a sub-broker or portfolio manager or depository participant in any manner whatsoever as long as it does not hold valid certificate of registration in such capacities, as per the ruling.
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