CIS: Sebi orders Touch Wood, directors to refund investors' money within 3 months

Markets regulator Sebi today ordered Touch Wood Ltd and its three directors to refund, within three months, investors' money that the company had illegally raised in the name of 'teak tree' investment schemes.

The regulator has also barred these entities from the capital markets "till the directions for refund/repayment to investors are complied with... and for a further period of four years from the date of completion of the refund".

According to Sebi, Touch Wood had collected funds towards the purchase of teak saplings or trees from public by promising them huge returns and the amounts so collected were pooled for the purpose of plantation and nurturing of teak trees.

The plantation activity was carried out on behalf of investors of the scheme by the company and the investors were not having day to day control over the operation and management of scheme, it added.

The company raised the money from investors through the scheme without securing Sebi's approval which is in violation with collective investment scheme (CIS) regulation.

As per the company's admission, Rs 20 lakh were outstanding towards money mobilised from teak tree applicants.

In an order passed today, Sebi said that the firms and its directors -- Virender Kumar Mittal, Sangeeta Mittal and Pawan Kumar -- "shall jointly and severally wind up its existing CIS and refund the contributions or payments collected from investors under the schemes with returns due to the investors within a period of three months".

After completion of the refund, they will have to submit a winding up and repayment report, within seven days, to Sebi.

In case they fail to comply with Sebi's directive, the regulator would initiate recovery proceedings against them.

Further, the company and its directors have been restrained from holding position as director or key managerial personnel of any listed company for a period of 4 years.