A Case-Study for Finance Students and Professionals in the Field
Once again, for the larger interest of the investors and for propriety reasons, the Security Exchange Board of India (SEBI) has passed an order against M/s. Cell Industries Limited and its promoters/directors. According to this order, the company and its promoters/directors have to refund the money collected by them through issuance of redeemable preference shares and non-convertible debentures including the funds collected from investors so far, and pending allotment of RPS and NCDs(if any), with a half-yearly compounded interest rate of 15% per year.
The company and its promoters/ directors are further restricted from entering the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, indirectly or directly in whatever way, with immediate effect. They are also restrained from issuing prospectus, offer document or advertisement soliciting money from the public and associating themselves with any listed public company and any public company which intends to raise money from the public, or any conciliator registered with SEBI. The above directions shall come into force with immediate effect and shall continue to be in force from the date of this Order till the expiry of 4 years from the date of completion of refunds to investors.
As per a press release by SEBI, the company was involved in fund mobilizing activity through issuance of redeemable preference shares and non – convertible debentures, to more than 49 persons, without abiding by the relevant provisions of the Companies Act, 1956 and the applicable provisions of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
The company and its directors will have to issue public notice, in all editions of two National Dailies (one English and one Hindi) along with in one local Bengali daily with wide circulation, mentioning in details about the modalities for refund, including details of contact persons’ names, addresses and contact details, within fifteen days of SEBI’s order coming into effect.
This act of SEBI has further reinstated the faith of the investors in the securities market of India along with setting an example for other opportunist companies which hoodwink the investors.