SEBI bars Bengal construction firm from mobilizing funds

The Securities and Exchange Board of India (SEBI) Tuesday prevented West Bengal-based Mondal Construction Co Ltd (MCCL) from raising funds through issuance of securities following an initial probe by the capital market regulator.

However, this ruling will not prohibit the company from redeeming the securities issued to the investors in view of the declaration by the company.

"That they have redeemed securities worth Rs.2.40 crore. and that only Rs.11.89 lakh is still remaining to be redeemed. The company shall also file a report regarding all such redemptions along with their reply," the SEBI order said.

The order also directed MCCL and its directors not to dispose of any of the properties or alienate or encumber any of the assets owned or acquired by that company through the offer of redeemable preference shares, without prior permission from the regulator.

According to SEBI, the company had issued the securities to over 50 people which under the rules made it a public issue of securities and hence would require a compulsory listing on a recognized stock exchange.

It has further alleged that MCCL had violated various norms related to securities market through such fund raising activities which took place during the timeframe of 2005-06 to 2012-13.