Sebi restricts Orchid Cultivation from mobilising funds

Markets regulator Sebi today prohibited Kolkata-based Orchid Cultivation from mobilising funds through issuance of securities and also barred the company and its directors from dealing in stock markets, with immediate effect.
An initial probe by Sebi found that Orchid Cultivation Projects India mobilised funds through issue of 'Redeemable Preference Shares'.
According to Securities and Exchange Board of India (Sebi), the company had violated various norms related to securities market through such fund raising activities.
The market regulator observed that the company had issued the securities to over 50 persons which under the rules made it a public issue of securities and hence would require a compulsory listing on a recognised stock exchange.

Among others, the firm was also required to file a prospectus, which it failed to do.
In an interim order today, Sebi said that steps were required to be taken in the case "to ensure that only legitimate fund raising activities are carried on by Orchid Cultivation Projects India and no investors are defrauded".

Consequently, the watchdog has directed the company not to mobilise funds from investors through issuance of equity shares or any other securities, till further orders.
The firm and its four directors including a past director have been prohibited from the capital markets as well as from issuing offer documents, advertisement for soliciting money from the public for the issue of securities, till further directions.

Further, the Sebi order has asked the company and its directors not to divert any funds raised from public at large.
Orchid Cultivation has also been asked to provide a full inventory of all its assets and properties as well as furnish complete and relevant information sought by the regulator relating to the matter.
The company and its directors are required to submit all relevant information with Sebi within 21 days from the date of receipt of the order.
Sebi had received several complaints against Orchid Cultivation in respect of non-repayment of amounts arising from subscription of preference shares.