SEBI has been clamping down on entities that have illegally raised money from the public. On a preliminary examination, the market regulator found that the issue was related to private placement of securities by Kolkata Weir
Market regulator Securities and Exchange Board of India (SEBI) has Kolkata Weir Industries (KWIL), its promoters and directors from raising money by issuing securities.
SEBI, citing the Sahara case and the Supreme Court's order in this regard, said Rs47.9 crore raised by Kolkata Weir from over one lakh investors amounted to a public offer and not a private placement.
"... KWIL is prima facie engaged in fund mobilising activity from the public, through the 'offer of redeemable preference shares,' which is a public issue made to 50 persons or more," the market regulator said in an order on 14th August.
SEBI has directed KWIL and its directors and promoters "not to collect any more money from investors through issuance of securities in any manner." This includes, Sahajahan Khan, Samsul Alam Khan, Ram Krishna Mondal, Prabir Haldar, Ratan Kumar, Ajay Kumar Srivastab, Selim Laskar, Lukaman Ansari, Chandan Chowdhury, Sahajamal Khan and Lakshmi Kanta Gayen.
The company has been barred from disposing of any of its properties without prior permission from SEBI. It also cannot divert any funds raised from the public, which are kept in bank account(s) and/or in the custody of KWIL, the order said.
SEBI noted that although the 'offer of redeemable preference shares' was stated to have been made on a private placement basis, "yet, through the same offer, KWIL had approached 105 lakh investors and mobilised funds amounting to Rs47.90 crore."
Since KWIL made the offer to 50 persons or more, the offer qualified as a public issue and had to be listed on a recognised stock exchange.
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