Micro Leasing and Funding as well its six directors, including three former directors are barred by SEBI from raising money from investors

Market regulator Securities and Exchange Board of India (SEBI) has barred Micro Leasing and Funding Ltd from mobilising funds from investors through issue of securities. SEBI also barred the company and its directors, including three former ones, from dealing in markets till further directions.

SEBI probe found that Micro Leasing and Funding had garnered over Rs58 crore from more than 50,000 investors through issuance of redeemable preference shares and through such activity had "prima facie" violated various norms.

"I am of the view that prima facie, Micro Leasing and Funding is engaged in fund mobilising activity from the public, through the offer of redeemable preference shares and as a result of the activity has violated the provisions of the Companies Act," SEBI Whole Time Member S Raman said.

Accordingly, SEBI has asked Micro Leasing and Funding to "not mobilise funds from investors through the issue of 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 company and its directors --Upendra Nath Mishra, Bijoy Kumar Routray, and Durga Prasad Shadangi alongwith its former directors-- Durga Prasad Misra, Kali Prasad Mishra and Banaja Patnaik--are barred from issuing any offer document or advertisement for soliciting money from the public for the issue of securities.

The company and its directors, "are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions," the market regulator said.

SEBI observed that Micro Leasing and Funding's redeemable preference shares issue was made to over 50 persons which under the rules made it a public issue of debt securities and hence would require a compulsory listing on a recognised stock exchange. It was also required to file a prospectus, among others, which it failed to do.

In its interim order, SEBI said "there is no other alternative but to take recourse through an interim action against Micro Leasing and Funding and its directors for preventing that company from further carrying on with its fund mobilising activity under redeemable preference shares."

SEBI has also asked the entities not to dispose 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 Micro Leasing and Funding to provide a full inventory of all its assets and properties, SEBI has also asked the company to within 21 days from the date of receipt of the order submit all relevant and necessary particulars sought by the watchdog.

SEBI said that the company allotted 58.1 lakh redeemable preference shares to a total of 50,262 individuals and investors and mobilised funds amounting to Rs58.06 crore between 2010-11 and 2012-13.