Markets watchdog Sebi has directed two companies -- Just-Reliable Projects India and Greenworld Agro Industries -- and their directors to refund the money they had illegally raised from investors.
Besides barring the firms for four years, the Securities and Exchange Board of India (Sebi) has directed them to refund the money along with 15 per cent annual interest.
A Sebi probe found that Just-Reliable had collected about Rs 11.43 crore by issuing redeemable preference shares (RPS) to 3,558 persons, while Greenworld Agro had mobilised Rs 1.11 crore by allotting RPS to 4,056 investors.
These funds were mobilised between 2009-10 and 2012-13 without complying with public issue norms.
Since the shares were issued to more than 50 people each, by the firms, the issuance qualified as a public issue that requires compulsory listing on the recognised stock exchange. They were also required to file a prospectus, among others, which they failed to do.
In separate orders, Sebi asked the firms and their directors to refund the money along with an interest of 15 per cent per annum.
They have been directed 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 details on contact persons within 15 days.
After completing the refund, the firms will have to file a report about completion of repayment with Sebi, within three months.
Also, they have been "restrained and prohibited from buying, selling or otherwise dealing in the securities market, from the date of this order till the expiry of four years from the date of completion of refunds to investors".
In case the companies fail to comply with these orders, Sebi would make a reference to state government or 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 company.
