Continuing its stringent action against entities illegally raising public money, Sebi today barred Life Care Real Developers from mobilising funds from investors through issuance of securities.
The market regulator found that Life Care Real Developers Ltd (LCRDL) had raised funds from thousands of investors through the issue of redeemable preference shares (RPS) and as a result had "prima facie violated" various norms.
The Securities and Exchange Board of India (Sebi) found that the firm 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.
"...LCRDL is prima facie engaged in fund mobilizing activity from the public, through the issue of RPS and a result of the aforesaid activity has violated" the provisions of the Companies Act, 1956, Sebi noted.
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 --Arshad Hussain, Mohammad Aftab Alam, Mohd Gani including its past Directors, Shiba Pravin, Mohd Seraj Lari, Rajneesh Chandra Shukla and Yogendra Pratap Shahi have also been prohibited from soliciting money from the public for the issue of securities, in any manner either directly or indirectly, till further orders.
Sebi observed that during the financial years 2010-11, 2011-12 and 2012-13, the company had allotted preferential shares to at least 1,696 persons and raised Rs 4.24 crore.
Further, Sebi order has asked the company and its directors not to divert any funds raised from public at large and provide all the information sought by the regulator.
It has also been asked to provide a full inventory of all its assets and properties as well as not to dispose of any of the properties or alienate or encumber any of the assets owned/acquired by the company through the issue of RPS, without prior permission from Sebi.
