Sebi orders three companies to repay investors' money

Markets regulator Sebi today asked three companies -- Astha Techno Realty India, MARS Agrofarm Developers and Amrit Projects -- to refund the money, along with interest, raised fraudulently from public.
Besides, the companies and their directors have been prohibited from the capital markets for four years.
Securities and Exchange Board of India (Sebi) has prima facie found that the firms were engaged in fund mobilising activity from the public, through Redeemable Preference Shares (RPS) without complying with the public issue norms.
It noted that Astha Techno had mobilised Rs 5 lakh by allotting RPS to 60 people in 2011-12, MARS Agrofarm had collected Rs 25 lakh by issuing RPS to at least 237 investors during the same period and Amrit Projects had raked in Rs 40.40 crore via RPS from 9,207 people between 2006-07 and 2010-11.

Under the norms, the firms were required to list its securities on the recognised bourse as the shares were issued to more than 50 persons. It were also required to file a prospectus, among other things, which it failed to do.
In similar worded orders, Sebi said the companies and their directors will have to refund the money garnered by them via the issuance of RPS to investors along with "an interest of 15 per cent per annum compounded at half yearly intervals, from the date when the repayments became due to the investors till the date of actual payment. "

After completing the repayments, the companies will have to file a report in this regard with Sebi within three months.

The regulator restrained the company and its directors from buying, selling or otherwise dealing in the securities market "till the expiry of four years from the date of completion of refunds to investors."
Also, they have been asked to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form.
The directions would come into force with immediate effect.
Non-compliance of the order would make Sebi register a case with the state government or police against them for fraud, cheating and misappropriation of public funds.

Besides, the Ministry of Corporate Affairs would initiate the process of winding up of the companies.
Earlier, in interim orders passed last year, Sebi had put several restrictions on these companies. The interim order came following a complaint received by Sebi alleging that the firms had raised funds from the public and had allegedly violated the provisions of the Companies Act.