SEBI found that Greenworld Agro and Mass Infra collected money from several investors through issuance of redeemable preference shares and non-convertible debentures -NCDs
Continuing with strict action against entities raising public money illegally, market regulator Securities and Exchange Board of India (SEBI) has restrained Greenworld Agro Industries Ltd and Mass Infra Realty Ltd from mobilising funds from investors.
Besides, SEBI has barred these two companies and their directors from accessing the securities market.
The regulator found that Greenworld and Mass Infra had garnered capital from several investors through issuance of redeemable preference shares (RPS) and non-convertible debentures (NCDs) respectively and had "prima facie" violated various norms.
SEBI observed that issues by these two 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 two separate interim orders, said that Greenworld and Mass Infra are prima facie engaged in fund mobilising activity from the public through the offer of RPS and NCDs respectively and as a result of such activities have violated the provisions of the Companies Act.
Accordingly, SEBI has asked these companies not to mobilise funds from investors through the offer of RPS/NCDs 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 Greenworld and Mass Infra 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 order.
In the case of Mass Infra, SEBI has prohibited Debenture Trust Suraksha and Mass Debenture Trust, from "continuing with their assignment as a debenture trustee in respect of the offer of NCDs of the company and also from taking up any new assignment or involvement in any new issue of debentures, etc in a similar capacity, from the date of this order till further directions".
According to SEBI, Mass Infra raised Rs37.90 crore from 14,256 investors while Greenworld mobilised funds to the tune of Rs111.06 lakh from 4,056 investors.