Capital markets watchdog Sebi today ordered two companies -- Real Vision International and AM Fund Managers -- to refund, along with interest, the money they had illegally raised from investors.
Besides, the Securities and Exchange Board of India (Sebi) has also barred the firms and their directors from the capital markets with immediate effect.
A Sebi probe found that Real Vision had collected about Rs 21.18 crore by issuing redeemable preference shares (RPS) to 11,832 persons and AM Fund had garnered Rs 1.21 crore by allotting RPS to 222 individuals between 2009-10 and 2012-13 without complying with the public issue norms.
Since the shares were issued to more than 50 people by each company, it qualified as a public issue that requires compulsory listing on the recognised stock exchange. It was also required to file a prospectus, among other things, which they failed to do.
Accordingly, the firms and their directors will have to "refund the money collected by the company through issuance of RPS to the investors... With an interest of 15 per cent per annum compounded at half-yearly intervals, from the date when the repayments became due till the date of actual payment."
They have been asked to issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including contact details within 15 days.
The companies and their directors have been "prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly in whatsoever manner, from the date of this order, till the expiry of four years from the date of completion of refunds to investors".
These orders will come into force with immediate effect.
In case of failure to comply with the directions within three months, Sebi would recover the amount and make a reference to the state government or the local police to register a case against them for fraud, cheating and misappropriation of public funds.
Besides, the Ministry of Corporate Affairs would initiate the process of winding up of the companies.
The Securities and Exchange Board of India (Sebi) has
extended the timline for submitting a copy of scheme information document (SID) to seven working days, prior to the launch of the scheme, from two working days.
"Presently, an AMC is required to submit soft copy of SIDs alongwith printed/final copy, two working days prior to the launch of the scheme. It has now been decided that such submission is required to be made seven working days prior to the launch of the scheme," the regulator said.
Besides, Sebi said mutual fund houses would be required to make annual disclosure regarding the auditor's certification obtained by them on the voting reports. The same would be submitted to the trustees and also disclosed in the relevant portion of the Mutual Funds' annual report and website.
Presently, an asset management company (AMC) is required to obtain auditor's certification on the voting reports being disclosed by them on a quarterly basis.
"Board of AMCs and Trustees of mutual funds shall be required to review and ensure that AMCs have voted on important decisions that may affect the interest of investors and the rationale recorded for vote decision is prudent and adequate. The confirmation to the same, along with any adverse comments made by the scrutinizer, shall have to be reported to Sebi in the half yearly trustee reports," it said.
