Capital markets watchdog Sebi today ordered Life Care Real Developers to refund, along with interest, the money it had illegally raised from investors.
Besides, Securities and Exchange Board of India (Sebi) has also barred the firm and its directors from the capital markets with immediate effect.
A Sebi probe found that the company had collected about Rs 4.24 crore by issuing redeemable preference shares (RPS) to 1,696 persons between 2010-11 and 2012-13 without complying with the public issue norms.
Since the shares were issued to more than 50 people, it qualified as a public issue that requires compulsory listing on the recognised stock exchange. It was also required to file a prospectus, among other things, which it failed to do.
Accordingly, the firm and its directors will have to "refund the money collected by the company through issuance of RPS to the investors...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."
They have been asked to 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 contact details within 15 days.
In case of failure to comply with the directions within three months, Sebi would recover the amount. It would make a reference to the state government or local police to register a case 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 company.
These orders will come into force with immediate effect.
