Continuing with strict action on entities illegally raising public money, Sebi has barred Kolkata-based Weird Industries from mobilising public funds and restricted it as well as its directors from accessing the securities market.
The market regulator found that Weird Industries had raised funds from thousands of investors through the issue of preference shares as well as non convertible debentures (NCDs) and as a result had "prima facie violated" various norms.
Sebi observed that the company had issued shares to over 50 persons which under the rules made it a public issue of securities, requiring a compulsory listing on a recognised stock exchange. It was also required to file a prospectus, among others, which it failed to do.
"Steps...Have to be taken in the instant matter to ensure only legitimate fund raising activities are carried on by Weird Industries Ltd (WIL) and no investors are defrauded," Sebi said in an order dated September 15.
Consequently, the market watchdog has directed the firm not to mobilise funds from investors through issuance of equity shares or any other securities, till further orders.
The company and its directors have also been "prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders".
Sebi observed that Weird Industries had issued and allotted preference shares to more than 2,000 investors.
Further, the Sebi order has asked the company and its directors not to divert any funds raised from public at large.
It has also been asked to provide a full inventory of all its assets and properties as well as furnish complete and relevant information sought by the regulator relating to the matter.
Besides, Sebi has prohibited Hari Pada Seth from "continuing with his present assignment as a debenture trustee in respect of the offer of NCDs of the company and also from taking up any new assignment or involvement in any new issue of debentures, etc in a similar capacity, from the date of this order till further directions".
Seth had prima facie failed to meet the eligibility criteria specified under the provisions of the Debenture Trustees Regulations, Sebi said.
The persons barred by Sebi include two present directors and six past directors of Weird Industries.
