CIS: Sebi bans NICL India, directors from markets

Regulator Sebi has banned Madhya Pradesh-based NICL India Ltd and its three present directors from the securities market for at least four years and directed them to refund the money the firm had collected through illegal collective investment schemes from the investors.

The directors -- Phool Singh Choudhary, Harish Sharma and Abhishek S Chouhan -- have also been restrained from holding position as directors or key managerial personnel of any listed company for a period of four years, Sebi said in a fresh ruling dated June 21.

The ruling has come more than three years after the regulator had passed an interim order in January 2015, wherein it had "prima facie" observed that NICL India was involved in illegal mobilisation of funds from the public through schemes which were in the nature of collective investment schemes (CIS) without obtaining certificate of registration from the Sebi.

The schemes related to purchase and development of land and the company had raised nearly Rs 7 crore from thousands of investors during the financial years 2010-11, 2011-12 and 2012-13.

Among others, through the interim order, the firm and directors were directed not to collect money from investors from its existing schemes and not to launch new ones to raise fresh funds.

"I have perused the contents of the interim order and do not find any reason to differ with the prima facie conclusion arrived at in the interim order," Sebi whole time member G Mahalingam said in the fresh ruling.

In the absence of any evidence provided to refute the prima facie findings in the interim order, I reiterate that the activities of the company as described in the interim order constitute CIS and the same have been carried out by the company without seeking a registration from the Sebi, thereby contravening the CIS regulations, he added.

The entities have been ordered to wind up the firm's existing CIS and refund the investors within a period of three months.

Following the completion of the refund, within a further period of seven days, NICL and its directors have to submit a winding up and repayment report (WRR) to the Securities and Exchange Board of India (Sebi).

"The WRR shall be supported by the proof of the trail of funds claimed to be refunded, bank account statements indicating refund to the investors and receipt from the investors acknowledging such refunds along with a certification of such repayment from two independent chartered accountants," the Sebi said.

In case, the entities fail to comply with Sebi's directions, the regulator said it will "initiate recovery proceedings" against them.