The company was engaged in fund mobilising activity through issue of Redeemable Preference Shares to more than 49 persons without complying with the provisions of the Companies Act, 1956, according to a SEBI Order on Affiance Industries Limited
SEBI passed an order on Affiance Industries Limited directing the company not to mobilise funds from investors. Further, the company and its directors are prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, till further orders. The company and its directors shall not dispose off any of the properties of the company and shall not divert any funds raised from the public.
The company was engaged in fund mobilising activity through issue of Redeemable Preference Shares to more than 49 persons without complying with the provisions of the Companies Act, 1956.
SEBI had received several complaints in October 2014, against Affiance Industries Limited (AIL) relating to illegal mobilisation of funds. Immediately SEBI wrote to AIL and started an investigation. Letters sent to AIL and its directors, were returned as undelivered with the remarks 'Refused', 'Unknown', etc. Subsequently, letters dated 8 December 2014, sent by SEBI to AIL's Directors i.e. Habib Sarkar and Lal Mahammad, were again returned as undelivered. Till date, no information has been received from any of the directors.
SEBI continued the investigation on its own and found that in the facts of the instant case, it prima facie appears that AIL has violated the provisions of Section 73 of the Companies Act, 1956, in respect of the Offer of Redeemable Preference Shares. AIL has made a public issue of shares and has not followed proper procedure to do so and it has also not got the shares listed in any stock exchange in the country.
The SEBI Member feels, “I am of the view that AIL is prima facie engaged in fund mobilising activity from the public, through the Offer of Redeemable Preference Shares and as a result of the aforesaid activity has violated the provisions of the Companies Act, 1956 (Section 56, Section 60 read with Section 2(36), Section 73).”
The SEBI Member concludes by saying, “The observations contained in this Order are made on the basis of the material available on record i.e. the complaints received by SEBI and information obtained from the Ministry of Corporate Affairs' website i.e. MCA 21 Portal. In this context, AIL and its directors are advised to show cause as to why suitable directions/prohibitions under Sections 11(1), 11(4), 11A and 11B of the SEBI Act including the following, should not be taken/imposed against them:
i. Directing them jointly and severally to refund money collected through the Offer of Redeemable Preference Shares along with interest, if any, promised to investors therein;
ii. Directing them to not issue prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, for an appropriate period;
iii. Directing them to refrain from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.”