Regulator Sebi barred Jharkhand-based Rainbow Industries and Constructions along with its nine former and present directors and promoter from the securities markets “till further directions” for violation of public issue norms.
Besides, the regulator asked entities why directions of refunding money along with interest to investors should not be imposed on them and directed them to reply in 21 days from the date of the order.
The regulator, in an interim order, said that Rainbow issued redeemable preference shares (RPS) to 5,379 persons amounting to Rs 6 crore during 2011-12. For the period 2012-13, it allotted RPS to 4,673 persons for Rs 5.36 crore.
The offer of RPS was made to more than 49 persons, thereby it ‘prima-facie’ qualifies to be a public offer, Sebi said.
The company, having made a public issue of RPS, was required to compulsory list the shares on a recognised stock exchange. It was also required to file a prospectus, among other things, Sebi added.
However, it “prima-facie observed that the company has failed to comply with the requirements,” the Securities and Exchange Board of India (Sebi) noted.
With regard to the directors (past and present), the regulator said during the collecting of amounts by the firm, they were holding the position of directorship and hence “liable for action”.
Accordingly, Sebi barred Rainbow, its past and present directors — Ashok Saw, Mukesh Singh, Nidhi Yogendra, Barun Kumar Rawani, Bisun Rawani, Ganesh Thakur, Dhiren Rawani, Nandlal Kishore — and promoter Mohini Devi from markets till further directions.
Moreover, the regulator directed the entities not to dispose of any of its assets nor divert any funds raised from public through the offer and allotment of RPS.