Sebi bans URO Autotech, asks to refund Rs 1.75 cr to investors

Sebi has barred URO Autotech from accessing capital markets, and directed the company to return to investors Rs 1.75 crore, along with interest within three months, which it had raised without complying with public issue norms.

The regulator also barred the company's former and present directors from accessing capital markets till the refund is complete.

Further, they will restrained from accessing the markets for a period of four years from the completion of refund.

Biswapriya Giri and Sanjoy Chowhan are the current directors of the company who have been barred from accessing the markets, while former directors Sachindra Nath Bhattacharya and Ipsita Das Giri have also been prohibited from doing so.

Sebi had conducted an investigation following a reference from the MCA (Ministry of Corporate Affairs) regarding complaints received against 'chit fund companies operative in West Bengal in respect of URO Autotech Ltd & its group companies'.

In its probe, Sebi found that the company had allotted 17,50,000 equity shares to a total of 1,000 investors in financial year 2011-2012, but did not file prospectus for the said allotment.

Since URO Autotech offered and issued equity shares to more than 49 persons, it was mandated to comply with 'public issue' norms, which mandate a company to register its 'prospectus' with the Registrar of Companies (RoC) before making a public offer or issuing the 'prospectus', Sebi noted in its order.

Thus, by issuing equity shares to more than 49 persons, the company had to compulsorily list such securities and was required to make an application to a recognised stock exchange for permission for the shares or debentures to be offered to be dealt with on the stock exchange.

If the company had not applied for the permission or if it was not granted, the company was required to forthwith repay with interest all money received from the applicants, Sebi said.

It was revealed that URO Autotech neither made an application seeking listing permission nor refunded the amounts on account of such failure.

Besides, it did not keep the amount received from investors in a separate bank account and failed to repay the same.

The company was also mandated to comply with the provisions of the ICDR (Issue of Capital and Disclosure Requirements ) Regulations relating to public issue of securities, Sebi said.

Accordingly, the regulator directed the company to refund the money of investors, totalling Rs 1,75,00,000, which was collected through allotment of shares of the company, with an interest of 15 per cent per annum, within a period of 90 days.

The refund has to be made through banking channels.

In case the company fails to comply with the order, the directors shall be liable for refunding the amount along with interest, Sebi said.