Also, the regulator barred the two companies, Subha Commercial Services and Progress Cultivation Limited, and their respective directors from the capital markets for a period of four years from the date of completion of refunds.

Sebi asked the companies and their seven directors to refund the money along with an interest of 15 per cent per annum.

A Securities and Exchange Board of India (Sebi) probe found that the firms had mobilised funds by issuing securities to more than 50 persons without complying with the public issue norms.

Progress Cultivation had mobilised at least Rs 9.32 crore between 2009-2010 and 2012-2013 from investors through issuing redeemable preference shares (RPS) and preference share application money pending allotment.

On the other hand, Subha Commercial Services raised Rs 65.67 lakh through allotment of RPS during the financial years 2012-13, 2013-14 and 2014-15.

Since the shares were issued by the firm to more than 50 people, it qualified as a public issue that requires compulsory listing on recognised stock exchanges, which the firm failed to do.

Among others, it was also mandatory for the firms to bring out a prospectus with respect to the public issue. In two separate but similar worded orders, Sebi said the companies and their directors jointly and severally, shall refund the money collected by the firms through the issuanceof RPS, which have violated market norms, with an interest of 15 per cent per annum compounded at half yearly intervals from the date when the repayments became due till the date of actual payment.

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