The Securities Exchange Board of India (SEBI) on Wednesday barred Kolkata-based Alchemist Capital Limited (ACL) and its directors from accessing the securities market and ordered the company to return the investors' money.
SEBI received information from the Registrar of Companies (RoC) in Punjab and Chandigarh alleging ACL had raised Rs.165 crore from 28,000 investors across India during 2006.
The RoC opined that such a wide subscription was not possible without making a public offer and shared the list of people to whom 'preferential shares' were issued.
The regulator, on the basis of the allegation from the RoC undertook an examination of the alleged mobilisation of public funds through issue of securities.
The SEBI, upon completion of the examination alleged ACL had made an offer and allotted Redeemable Preference Shares during the financial years 2003-2004, 2004-2005, 2005-2006 and 2006-2007 in contravention of some of the provisions of the Companies Act, 1956 and SEBI (Disclosure and Investor Protection) Guidelines, 2000.
Thereafter, the SEBI has ordered the company to "forthwith refund the money collected by the company through the issuance of Redeemable Preference Shares" to the investors including the money collected from investors till date and the pending allotment of securities with an annual interest of 15 percent compounded at half yearly intervals.
It has, however, permitted the company to sell its assets for making the repayments to the investors and deposit the proceeds in an escrow account with a nationalised bank.
The order has further detailed the provisions in case of failure to do so by ACL.