Markets regulator Sebi levied a fine of Rs 1 crore on En Aromatic & Petro Chemicals Ltd for indulging in illegal fund raising and failing to comply with the public issue norms.
The regulator during its investigation found that the company had issued redeemable cumulative preference shares (RCPs) to over 89,000 investors between 2003-2004, and 2010-2011.
The firm had raised nearly Rs 61.5 crore through the RCPS offer.
The firm while supplying certified statement for mobilisation of funds through issuance of RCPs stated that "the issue of preference shares is through private placement and therefore the company does not need to file prospectus/red herring prospectus with the ROC," Sebi noted in its order dated May 17.
However, Sebi said that an offer made for subscription of shares or debentures to 50 persons or more amounts to public issue and is not considered an issue of shares or debentures by private placement.
Thus, the "noticee was required to comply with various public issue norms prescribed under the Companies Act, 1956, DIP Guidelines read with ICDR Regulations which, it failed to do so," Sebi said.
Accordingly, a fine of Rs 1 crore has been imposed on En Aromatic & Petro Chemicals for violating provisions of (Disclosure and Investor Protection) Guidelines and ICDR (Issue of Capital and Disclosure Requirements) Regulations.
