Sebi has sought replies from BSP Infrastructure & Construction and 18 individuals, including the firm's past and present directors over illegal fund mobilisation from investors.
The regulator has barred the 19 entities from capital markets "until further orders" and asked them to explain why directions against them cannot be issued over illegal fund raising.
Among the directions is one pertaining to refund of money to investors, collected by BSP through allotment of secured redeemable debentures during the financial years 2010-11, 2011-12 and 2012-13, with an annual interest of 15 per cent, by the firm and 11 individuals who were directors of the company when the money was mobilised.
A ban of at least four years from the securities market for BSP, its promoters and directors and a debenture trustee (19 entities), is also part of the directions.
According to a Sebi interim order dated September 12, BSP had allotted debentures to more than 49 persons, which made it "prima facie" a public issue in terms of the Companies Act.
Since it was a public issue, the shares had to be dealt on a recognised stock exchange, which the company did not do.
Among others, the company had to get a prospectus registered with the Registrar of Companies. However, the firm did not comply with this provision as well.
"The noticees (19 entities) may, within 21 days from the date of receipt of this interim order - cum show cause notice, file their respective replies," the Securities and Exchange Board of India (Sebi) said.
The regulator noted that in the event of the entities failing to file replies or requesting for an opportunity of personal hearing within 90 days, the preliminary findings against them will "become final and absolute against the respective noticees automatically, without any further orders".
"... the money mobilisation on the part of BICL (BSP Infrastructure & Construction Ltd) is potentially placing investors at risk by not following the requirements of law applicable to a public issue," Sebi said.
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