Sebi bars Seashore from raising funds via issuing securities

Continuing with efforts to check illicit money-collection activities, Sebi today restrained Seashore Securities, its promoters and directors from raising funds from investors through issuance of securities, till further directions.
The company, its promoters and directors have also been barred from securities market till completion of the probe and further directions from the market regulator.
An initial probe by the Securities and Exchange Board of India (Sebi) has found that Seashore Securities had raised crores from investors in Odisha under the garb of 'cumulative redeemable preference shares' and promising them high returns.
Citing details available with it, Sebi said that Seashore had raised Rs 503.22 crore from investors till April 27, 2012.

Sebi observed that the issue of cumulative redeemable preference shares was made to more than 50 persons which under the rules made it a public issue of securities and was hence required to be listed on a recognised bourse. The firm was also required to file a prospectus for the public offer.
The regulator has found that the shares were issued during the years of 2008, 2009, 2010, 2011 and 2012.

Sebi observed that such activities were detrimental to the interests of the investors and also the development of the securities market.
Accordingly, the watchdog has barred Seashore and its promoters and directors "from mobilising funds through the issue of redeemable preference shares or through the issuance of equity shares or any other securities, to the public and/ or invite subscription, in any manner whatsoever, either directly or indirectly till further directions".

The entities are also prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public through issue of securities.
Besides, the company and its promoters/directors cannot dispose any of the properties acquired through the funds raised from public by issuance of the preference shares as well as divert the funds raised without prior permission of Sebi until further directions.
Moreover, the entities "are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities and being associated with the securities market in any manner whatsoever, directly or indirectly through any person/ entity till further direction".

The company has also been asked to furnish all details sought by Sebi for its probe.
Cumulative redeemable preference share are those wherein the unpaid dividends on the preference shares are treated as arrears and are carried forward to subsequent years till it is paid off in full.