Mumbai: Cracking down on fraudulent investment schemes, market regulator SEBI Thursday barred Kolkata-based Basil International as well as its promoters and directors from raising money from the public.
Basil International is the latest entity from Kolkata against which action has been initiated by SEBI after barring Saradha Realty India to wind up its operations and return the money to investors.
The issue of ponzi schemes or fraudulent money pooling activities came to the fore after the recent instance of Saradha Group defrauding investors came into light.
In its order today, SEBI has also directed that Basil International should not dispose of any of its assets without the regulator's permission. Also, the company has been asked not to divert any funds raised from public at large kept in its custody.
Basil International had allegedly taken deposits from the public under the garb of redeemable preference shares from rural people after promising high returns in the range of 11-14 percent. The company raised about Rs 92 crore through issue of redeemable cumulative preference shares till March 31, 2012.
Going by allegations, the company was utilising such proceeds in paying huge commission to its agents, investing in its business assets, fixed deposits and siphoning off the funds as cash.
Passing an order against Basil International, SEBI said the action has been taken to ensure that the company does not collect further funds and safeguard the assets or property acquired through such funds of the investing public till complete details are brought out.
Till a final decision is taken, Securities and Exchange Board of India (SEBI) said it becomes necessary "to take urgent preventive and remedial action by way of this ex-parte order".
SEBI began to probe the activities of the company following a complaint from the Directorate of Income Tax (Investigation), Kolkata, back in 2011.
Citing the complaint, SEBI said that Basil International is not registered as a Non-Banking Financial Company with RBI and has not been appointed by any SEBI-registered Registrar for issuing redeemable preference shares.
SEBI said its order should be treated "as a show cause notice to Basil International, its promoters and directors". All of them have been asked to give their responses within 15 days from today.
The market regulator has sought to know "why appropriate actions under the SEBI Act should not be taken/issued against them for non-compliance with the provisions of the Companies Act..."
The order is against directors including Satya Narayan Karmakar, Sourindra Nath Mukherjee, Biplab Talukdar and Manindra Kumar Basu.
"Non?compliance and non-cooperation by BIL in submitting information to SEBI, no prospectus having been filed by BIL with the RoC and complaints received against BIL also indicate that BIL is attempting to conceal information about offer size and other essential details in order to avoid compliance with company law and securities law," the order said.
According to the order, the offer of redeemable preference shares is stated to have been made to promoters/directors, employees, the shareholders and their friends and relatives on private placement basis.
As per the copy of receipts and payment account of the company received from Directorate of Income Tax, the entity had mobilised about Rs 95.9 crore till financial year ended 2011 through issue of share certificates.
From the balance sheet of Basil International as on March 31, 2012, as submitted by BIL, it has mobilised Rs 92 crore through issue of redeemable cumulative preference shares.
Further, the order said, "Basil International has issued equity shares during FY2009-10 as well as during FY2011-12. Also, during FY2011-12 Basil International has authorised issue of preference shares to the extent of Rs 101,90,01,000 (Rs 101.9 crore)".