Sebi bars GBC Enterprise from raising public funds

Market regulator Sebi has restrained Kolkata-based GBC Enterprise Ltd (GEL) and its directors from mobilising funds from public through issuance of securities.
It was alleged that GBC Enterprise raised over Rs 60 crore through issue of redeemable preference shares to more than 8,000 people.
The Securities and Exchange Board of India (Sebi) found that the company had issued equity shares to 50 or more persons as so was under a legal obligation to get listed on a stock exchange.
Among others, it was also mandatory for the company to bring out a prospectus with respect to the public issue. However, it failed to comply with these norms.

In an order issued last week, Sebi said "GEL is prima facie engaged in fund mobilising activity from the public, through the offer of redeemable preference shares" and as a result of such activity has violated the provisions of the Companies Act.
Accordingly, Sebi restrained the company and its directors "from mobilising funds through the issue of equity shares or through any other form of securities, to the public and/ or invite subscription, in any manner whatsoever, either directly or indirectly till further directions."

Sebi has also asked the entities not to dispose any of the properties or assets acquired by that company through the issue of equity shares, without prior permission from the regulator as well as not to divert the funds raised from public.

While asking GBC Enterprise to provide a full inventory of all its assets and properties, Sebi has also asked the company to submit all relevant and necessary particulars sought by the watchdog.
These directions would come into force with immediate effect.
"During the financial years 2012-13 and 2013-14, GEL allotted redeemable preference shares to a total of more than 81,196 individuals/investors and mobilised an amount of Rs 60.59 crore," Sebi noted.