Markets regulator Sebi today ordered two companies -- Dynamic Asset Management and Real Agri Industries and Services -- and their directors to refund investors money raised illegally through issuance of securities.
Besides, the Securities and Exchange Board of India (Sebi) has barred the firms and its directors from the capital markets for four years.
A Sebi probe found that the companies had mobilised funds by illegally issuing redeemable preference shares (RPS) without complying to the prescribed norms.
Dynamic Asset Management had raised about Rs 4.42 crore through issuance of RPS to 634 allottees during 2011-13.
Similarly, Real Agri Industries and Services had mobilised funds to the tune of Rs 90 lakh through issuance of RPS between 2009 and 2012 to more than 800 investors.
Since shares were issued by these firms to more than 50 people, it qualified as a public issue that requires compulsory listing on recognised stock exchange. They were also required to file a prospectus, among other things, which they failed to do so.
In two separate orders, the regulator has directed the companies and their directors to refund money along with 15 per cent annual interest.
The directions would come into force with immediate effect.
The firms and their directors have been prohibited from buying, selling or otherwise dealing in the securities markets for four years and the restriction will continue till the completion of refunds to investors.
In case the companies fail to comply with these orders, Sebi would make a reference to the state government or local police to register a case against them for fraud, cheating and misappropriation of public funds.
Besides, it would also make a reference to the Ministry of Corporate Affairs to initiate appropriate action against the companies as deemed fit.
