The stock of Cal Refineries plummeted 8.3 per cent as the Securities and Exchange Board of India barred the company from issuing equity shares or any other securities for a further period of eight years.

Meanwhile, Cals Refineries has informed the BSE that D. Sundararajan, Managing Director, and R. Rajagopalan, Independent Director, have resigned from the board of the company with immediate effect.

Irregularities in GDR issue

According to SEBI, 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 10-year ban on the company from issuance of any securities.

The case is related to alleged market manipulation in the 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.’’

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 have been fraught with malafides at every stage of its execution.’’

(This article was published on October 25, 2013)
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