New Delhi: Markets regulator Sebi has prohibited two firms - Togo Retail Marketing and Swasata Cements and their directors from raising fresh money from investors in a matter relating to violation of public issue norms. Sebi had received a complaint from an investor alleging that Togo Retail was raising money from public through Redeemable Preference Shares in the garb of private placement ostensibly to promoters/directors, employees, shareholders and their friends and relatives.
Besides, it was alleged that Swasata Cements and its other group entities did not pay the amount to investors on maturity. In its probe, Sebi found that Togo Retail had mobilised over Rs 9 crore from 10,759 investors by issuing Redeemable Cumulative Preference Shares (RCPS)in 2005-06, while Swasata Cements had allotted Non-Convertible Debentures (NCDs) to 11,000 investors and garnered Rs 6.64 crore in 2008-09 and 2009-10. The companies, through such activities, violated various norms, Sebi said. The regulator observed that allotment of securities by the firms was a public issue, which under the rules required a compulsory listing on a recognised stock exchange.
They were also required to file a prospectus, among others, which they failed to do. Accordingly, Sebi, in an interim order, has barred the companies from raising "any fresh funds from investors through the RCPS/NCDs or through any other securities, to the public and/or invite subscription, in any manner whatsoever, either directly or indirectly, till further directions." In addition, the companies and their respective directors have prohibited from the securities markets. Further, Securities and Exchange Board of India (Sebi) has put several restriction on the firms and their directors. These directions "shall take effect immediately and shall be in force until further orders."
