Market regulator Securities and Exchange Board of India (Sebi) on Friday barred Cals Refineries from issuing equity shares and any other security for a further eight years, as the company was found guilty in a case involving irregularities in issuance of global depository receipts (GDRs).
An interim prohibitory order was imposed on the company in 2011 and the company has already undergone restrictions for two years, while a final order was passed today imposing a ten-year ban on the company from issuance of any securities.
The case is related to alleged market manipulation in trading of GDRs - a financial instrument used to raise capital overseas - of certain companies including Cals.
Passing the order, Sebi directed "Cals not to issue equity shares or any other instrument convertible into equity shares or any other security, for a period of ten years".
However, Sebi noted that Cals had already undergone the prohibition imposed on it for a period of about two years following an interim order in 2011 by the market regulator in view of the GDR manipulation charges against the company.
"In view of this factual situation, it is clarified that the prohibition already undergone by Cals pursuant to...Sebi order shall be reduced while computing the period in respect of the prohibition imposed vide this order," it added.
Sebi said "the modus operandi adopted by Cals Refineries in conceiving the fraudulent arrangement of GDR issue to defraud investors and also facilitating the unjust enrichment of its promoter at the expense of investors has been fraught with mala fides at every stage of its execution".
The regulator's show cause notice had alleged Cals of entering into agreements wherein the firm itself financed the subscription of its GDR issue, which is prohibited under the Indian laws.
Among others, Cals allegedly made false disclosures to leading bourse BSE that GDR issuances were successfully subscribed by foreign investors, and used this artifice and misleading information to induce the investors in India to deal in its shares.
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