Capital market regulator Sebi today directed Regenix Drugs Limited (RDL) and its directors to refund investors' money, along with interest, within three months.
Besides, Regenix Drugs and its seven directors have also been barred from accessing the securities market till the time refund of the money is made to investors.
The company had allotted more than 92 lakh shares to over 2,300 persons between 2007 and 2011.
The regulator observed that the company had allotted equity shares to over 50 persons which under the rules made it a public issue of securities.
Hence, it would require a compulsory listing on a recognised stock exchange. It was also required to file a prospectus, among others, which it failed to do.
"Since RDL had allotted shares to more than 49 persons and these allotments were deemed to be "public issues", it was under a mandatory obligation to make an application to a recognised stock exchange for listing of those shares...Which it failed to make," Sebi Whole Time Member Rajeev Kumar Agarwal said in an order.
"I, therefore, find that in this case, RDL has contravened the provisions ..Of the (Companies) Act since it did not apply for listing of its shares on any recognised stock exchange," he added.
Sebi has asked Regenix Drugs and its directors to refund the money collected pursuant to the allotment of shares between 2007 and 2010 to the allottees "with interest at the rate of 15 per cent per annum from the date of receipt of money till the date of such refund."
The company and its directors were restrained from "buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner till the refund of the money is made to the allottees."
Besides, they have been restrained from associating themselves, with any public company which intends to raise money from the public, till the refund of the money.
RDL was incorporated in May 2007 by a group of doctors and their fraternity members.
The company had claimed that it had "allotted shares to persons belonging to doctors fraternity, their close relatives and associates on their request".
The barred directors are: Ayyavu Ramamurthy, Vishwas Vasant Pathak, Raju Gunasekaran, Malathy Ramamurthy, Arvind Devanathan, Govindarajan Venkatakrishna and Natarajan Arun.
