SEBI found that these companies garnered capital from several investors through issuance of redeemable preference shares
Market regulator Securities and Exchange Board of India (SEBI) has restrained Federal Agro Commercials Ltd (FACL), Kolkata Aryan Food Industries Ltd (KAFIL) and Waris Agrotech (India) Ltd (WAL) from mobilising funds from investors.
Continuing with strict action against entities raising public money illegally, SEBI has also barred these three companies and their directors from accessing the securities market.
The market regulator found that the companies had garnered capital from several investors through issuance of redeemable preference shares (RPS) and had “prima facie” violated various norms.
SEBI observed that issues by these three firms were made to more than 50 people. Under the rules, that made them public issues of debt securities requiring compulsory listing on a recognised stock exchange. They were also required to file their prospectus, which they failed to do.
The regulator, in three separate orders, said that Federal Agro Commercials, Kolkata Aryan Food Industries and Waris Agrotech are prima facie engaged in fund mobilising activity from the public, through the offer of redeemable preference shares and as a result of such activities has violated the provisions of the Companies Act.
Accordingly, SEBI has asked FACL, KAFIL and WAL “not to mobilise funds from investors through the offer of RPS or through the issuance of equity shares or any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly, till further directions”.
Further, the companies and their directors are barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.
These firms and their respective directors are restrained from accessing the securities market.
SEBI has also asked the entities not to dispose of any of the properties or assets acquired by that company through the issue of redeemable preference shares, without prior permission from the regulator as well as not to divert the funds raised from public.
While asking FACL, KAFIL and WAL to provide a full inventory of all its assets and properties, SEBI has also asked these companies to within 21 days from the date of receipt of the order submit all relevant and necessary particulars sought by the watchdog.
The directions shall take “effect immediately and shall be in force until further orders,” Sebi said in its yesterday’s order.
According to SEBI, FACL raised Rs25.94 lakh from 310 investors, KAFIL mopped-up Rs49.64 lakh via 115 persons and WAL allotted redeemable preference shares to 475 individuals and mobilised funds amounting to about Rs36 lakh.
If you want to keep your money safe, you will have to assume regulators are not there to protect you
In the world of investment and banking, the individual has to bank on a lot of luck and good fortune. Regulations and regulators work as handmaidens of the industry players.
Regulators are generally like the cops in movies—they come in after all the action is over.
SEBI have 123 funds registered as AIFs. Of these, around 34 entities got the market regulator's approval to operate so far this year, 67 in 2013 and the remaining 22 in 2011
Market regulator Securities and Exchange Board of India (SEBI) has allowed as many as 123 entities to set up alternative investment funds (AIFs), the newly created class of pooled-in investment vehicles for real estate, private equity and hedge funds, in less than two and half-years.
Since July 2012, SEBI have 123 AIFs have been registered with it.
Of these, around 34 entities got the market regulator's approval to operate so far this year (January-November), 67 in 2013 and the remaining 22 in 2011.
The AIFs that have registered with SEBI in November are Religare Dynamic Trust, Indus Way Emerging Market Fund and Carpediem Capital Partners Fund.
Singular India Opportunities Trust was registered in October.
The regulator had notified in May 2012, the guidelines for this new class of market intermediaries. AIFs are basically funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per a pre-decided policy.
Under SEBI guidelines, AIFs can operate broadly in three categories. The SEBI rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others.
The Category-I AIFs are those funds that get incentives from the government, SEBI or other regulators and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds.
The Category-III, AIFs are those trading with a view to making short-term returns and it includes hedge funds, among others.
The Category-II AIFs can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. These AIFs include private equity funds, debt funds or fund of funds, as also all others falling outside the ambit of above two other categories.