Markets regulator Sebi today asked Swarnabhumi Developers and its directors to refund the money to investors which it illegally raised by issuing redeemable preference shares (RPS).
Besides, the Securities and Exchange Board of India (Sebi) also imposed a ban on the company and its five directors -- Biswanath Bhattacharya, Sanjoy Kumar Layek, Ranjit Kumar Sarkar, Prakash Mandal and Sudip Kr Barua -- for four years from the completion of refund.
According to Sebi, the company raised Rs 46 lakh from 365 investors in several tranches during 2010 and 2011.
The regulator said the series of transactions which were in close proximity of each other indicates that such allotments were part of the same offer.
Since the shares were issued by the firm to more than 50 people, it qualified as a public issue that requires compulsory listing on recognised stock exchanges, which the firm failed to do.
Among others, it was also mandatory for the firms to bring out a prospectus with respect to the public issue.
In an order today, SEBI asked Swarnabhumi Developers and its directors to "refund the money collected by the Company through the issuance of RPS...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".
In addition, they "shall issue public notice, in all editions of two national dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including details of contact person within 15 days of this order coming into effect".
In case Swarnabhumi Developers fails to comply with these directives, Sebi would make a reference to state government or local police to register a case against the company for fraud.
Besides, the Ministry of Corporate Affairs would initiate the process of winding up of the company.
