Pulling the plug on illegal raising of funds by Amazan Capital, market regulator SEBI on Tuesday barred the company and its directors from mobilising money by issuing securities.
The move follows Securities and Exchange Board of India (SEBI) receiving a reference from the Reserve Bank regarding collection of money by Amazan Capital by way of issuance of equity as well as preference shares.
SEBI found that Amazan Capital had raised Rs 7.7 crore from 871 people through issuance of equity shares in 2010-11 and 2011-12.
The company, through such activity, had allegedly violated various norms, Sebi said.
The regulator observed that allotment of shares by Amazan Capital was a public issue, which under the rules require a compulsory listing on a recognised stock exchange. It was also required to file a prospectus, among others, which it failed to do.
“The company is engaged in fund mobilising activity from the public, through the offer and issuance of equity shares and has contravened the provisions...of the Companies Act, 1956 and the provisions of the ICDR Regulations,” SEBI said in an interim order.
The directors of the company - Joydeb Garai, Basudeb Garai, Gargi Biswas, Parag Keshar Bhattacharjee, Manigrib Bag and Dillip Kumar Gangopadhyay being the ‘officers in default’ - are found responsible for the alleged contraventions committed by the firm.
The company and the directors have failed to make repayments to the persons (from whom monies were mobilised through issue of equity shares).
Accordingly, SEBI has restrained the company and its directors from “mobilising funds through the issue of securities to the public, and/or invite subscription, in any manner whatsoever, either directly or indirectly or through other companies in which they are directors/promoters, till further directions.”
Further, the firm and its directors have been barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.
They have been restrained from accessing the securities markets, SEBI said.
The capital market watchdog also asked the entities not to dispose any of the properties or assets acquired by that company without prior permission from the regulator as well as not to divert the funds raised from the public.
These directions “shall come into force with immediate effect and shall continue to be in force till further directions”.
