Markets regulator Sebi today barred Dynamic Asset Management Ltd from raising funds from investors through issue of securities, besides directing the firm as well as its directors not to deal in markets till further directions.
The Securities and Exchange Board of India (Sebi) found that the company had garnered Rs 4.42 crore from more than 600 investors by way of issuance of redeemable preference shares (RPS).
Sebi observed that Dynamic Asset issued RPS to over 50 persons which under the rules made it a public issue of debt securities and hence would require a compulsory listing on a recognised stock exchange. However, it failed to do the same.
"I am of the view that Dynamic is prima facie engaged in fund mobilising activity from the public, through the offer of RPS," and as a result of such activity violated the provision of the Companies Act, Sebi Whole Time Member S Raman said in his 13-page order.
Accordingly, Sebi has asked Dynamic Asset not to "mobilise any fresh funds from investors through RPS 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."
Besides, the company and its directors are prohibited from issuing any offer document for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders.
The company and its directors are "restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions", the order said.
Sebi has also asked the entities not to dispose any of the properties or assets acquired by that company through the issue of redeemable preference shares, without prior permission from the regulator as well as not to divert the funds raised from public.
Among the barred directors are Basanta Kumar Sundara, Saroj Kumar Sahoo, Rajesh Das, Pradip Kumar Mahapatra, Ajaya Kumar Das, Susanta Kumar Panda, Narendra Rout, Nihar Ranjan Bidhar, Kishore Chandra Maharathi, Sangram Keshari Tarai, Madhaba Prasad Mohanty and Sugyani Charan Nanda.
These "directions shall take effect immediately and shall be in force till further orders," the Sebi order said.
According to the regulator, Dynamic Asset had issued and alloted RPS in series of allotments of 634 investors and raised an amount of Rs 4.42 crore during the financial years 2011-12 and 2012-13.
