Sebi bars 4 companies from raising public money

To protect investors from illegal mobilisation of funds, the Securities and Exchange Board of India (Sebi) has barred four companies and their directors from raising money by issuing securities.

The move follows Sebi receiving a complaint against these companies -- Bishal Horticulture & Animal Projects, Bishal Distillers, Bishal Agri-Bio Industries and Bishal Abasan India -- alleging illegal mobilisation of funds.

Sebi found that these companies had allotted redeemable preference shares (RPS) and non-convertible debentures (NCDs) worth more than Rs 12 crore to over 4,300 people.

These companies, through such activity, had allegedly violated various norms, Sebi said.

The regulator observed that allotment of shares by these four companies was a public issue, which under the rules require a compulsory listing on a recognised stock exchange.

It was also required to file a prospectus, among others, which it failed to do.

In four separate interim orders Sebi said, these firms are prima facie engaged in fund mobilising activity from the public, through the offer of RPS or NCDs and as a result of such activity they violated the provisions of the Companies Act.

Accordingly, Sebi said that these companies "shall forthwith cease to mobilise any fresh funds from investors through the offer of RPS, NCDs or through issuance of any other securities, to the public or invite subscription, in any manner whatsoever, either directly or indirectly till further directions."

Further, the firms and their directors have been barred from issuing any offer document or advertisement for soliciting money from the public.

They have been restrained from accessing the securities markets, Sebi said.

The regulator also asked the entities not to dispose any of the properties or assets acquired by that company without prior permission from the regulator as well as not to divert the funds raised from the public.

These directions "shall take effect immediately and shall be in force until further orders.

Securities and Exchange Board of India ( SEBI )