It was alleged that Shah Group Builders raised over Rs 22 crore through issue of shares to more than 1,500 people with a promise to list the shares through IPO. The company had allegedly defaulted in payment of the agreed interest and has not refunded the principal amount.
The Securities and Exchange Board of India (SEBI) found that the company had issued equity shares to 50 or more persons as so was under a legal obligation to get listed on a stock exchange.
Among others, it was also mandatory for the company to bring out a prospectus with respect to the public issue. However, it failed to comply with these norms.
In an order issued on Thursday SEBI said, the company and its directors or promoters-- Nalin V Shah, Nirav N Shah and Neelam N Shah were "involved in the mobilisation of public funds through the issue of equity shares without complying with the applicable law."
Accordingly, SEBI restrained the company and its directors "from mobilising funds through the issue of equity shares or through any other form of securities, to the public and/ or invite subscription, in any manner whatsoever, either directly or indirectly till further directions."
They barred them from issuing any offer document or advertisement for soliciting money from the public for the issue of securities. Further, they are prohibited from accessing the securities market till further directions.

SEBI has also asked the entities not to dispose any of the properties or assets acquired by that company through the issue of equity shares, without prior permission from the regulator as well as not to divert the funds raised from public.
While asking Shah Group Builders to provide a full inventory of all its assets and properties, SEBI has also asked the company to submit all relevant and necessary particulars sought by the watchdog. These directions would come into force with immediate effect.
According to SEBI, the company had allotted equity shares in various tranches and had mobilised funds to the tune of Rs 22.55 crore from 1,522 investors between 2008 and 2013.

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