New Delhi, January 31, 2017

Concerned over a large number of companies indulging in illegal money pooling activities, markets regulator Sebi on Monday cautioned investors and general public against dealing with such entities — 256 as per the latest update.

The Sebi has cautioned investors against unlisted firms issuing securities without complying with the market norms.

It advised investors to ensure that the companies seeking to raise funds have filed offer documents or applications with stock exchanges for listing.

Some unlisted companies are luring retail investors by issuing securities, including non—convertible and convertible debentures, non—convertible and convertible preference shares, equity shares in the garb of private placement without complying with requisite provisions of the law, Sebi said in a statement.

It has taken several prohibitory actions against these 256 firms. Among such firms are Sunshine Agro Infra, Greater Kolkata Infracon, Megasys Healthcare, Zenith HiRise Infracon and Falcon Infra Projects. According to the norms, any offer of securities made to 50 or more persons has to be construed as a ‘Public Offer’, while private placement would be made only to such persons whose names are recorded by the company prior to the invitation to subscribe.

Further, in case of private placements, the company would not release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about such an offer.

Further, such offer or invitation would not be made to more than 200 persons in aggregate in a financial year.

[The Deccan Herald]