Markets regulator Sebi has ordered Shah Group Builders Ltd and its directors to refund over Rs 6 crore to investors within one year, which it had illegally raised from them.
While barring the firm and its directors from dealing and soliciting money in capital markets for 18 months, Securities and Exchange Board of India (Sebi) also ordered Shah Group Builders to pay 15 percent interest along with the refund amount.
A probe by Sebi found that the company had raised the money through issue of shares to more than 1,500 people between July-November 2008 without complying with the regulatory provisions applicable for a public issue.
The capital market regulator noted that as the issue by Shah Group Builders was made to 50 or more persons, the company was under a legal obligation to get listed on a stock exchange.
Among others, it was also mandatory for the firm to bring out a prospectus with respect to the public issue.
In the order, Sebi directed the firm and its promoters /directors to "refund/repay the money to the tune of Rs 6.16 crore collected pursuant to the allotment of shares by Shah Group Builders during July-November 2008 to allottees along with interest at the rate of 15 percent per annum from the date of receipt of money from them till the date of such refund within one year from the date of this order".
Besides, Sebi said that atleast 25 percent of the repayment would be made to investors in every quarter. In addition, the company and its directors - Nalin Virji Shah, Neelam Nalin Shah and Nirav Nalin Shah - have been barred from the capital markets for 18 months or till the date of refund of money to the allottees whichever is later.
They have been asked to produce documentary evidence certified by a Chartered Accountant to show the repayment of Rs 3.6 crore as claimed by them within one month.
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