NEW DELHI (INDIA):Regulator Sebi barred Shreebhumi Constructions and its directors from the capital market for not complying with public issue norms.
A probe by Securities and Exchange Board of India (Sebi) found that the company had allotted redeemable preference shares worth Rs 1.95 crore to 241 people in 2011-12 and 2012- 13.
Since these shares were issued to more than 50 investors by the company, this qualified to be a public issue, which requires compulsory listing on recognised stock exchanges. Among others, the firm was also required to file their prospectus, which it failed to do.
“Although Shreebhumi Constructions has not exceeded allotment to more than 49 persons in each allotment made, commencing from January 30, 2012 to August 20, 2012 the total number of allottees exceeds 49.
“This pattern of repeated allotment on frequent basis during a short span of 8 months appears to have been done solely for the purpose of avoiding the applicability of … Companies Act, 1956 and consequent regulatory compliances,” Sebi whole time member G Mahalingam said in an interim order dated June 12.
He further said, “the frequency of allotment of RPS thereby raising large amounts from the public coupled with the absence of information from the company including those relating to SCL’s board decisions to allot RPS, leads one to draw an adverse inference against Shreebhumi Constructions”.
Prima facie the company has breached the provisions of Companies Act in connection with the subject offer and allotment of preference shares, Mahalingam said.
Accordingly, Sebi has restrained the company and its directors – Shubhranshu Singh, Chhotrai Majhi and Prabin Dash – from accessing the securities market or buying, selling or otherwise dealing in such market, either directly or indirectly.
It has asked them not to dispose of any of their assets nor divert any funds raised from public through the offer and allotment of preference shares.
Source: Press Trust of India