Indian Infotech & Software Ltd (IISL) along with four individuals — Kamal Nayan Sharma, Harish Joshi, Mukund Bhardwaj and Varsha Muraka — have been restrained from accessing securities markets for a period ranging from three months to one year.
Sharma, Muraka and Joshi were directors of IISL during financial year 2015-16, while Bhardwaj was its Chief Financial Officer.
In an interim order in September 2017, Sebi had directed the BSE to appoint an independent forensic auditor to verify the misrepresentations, including in financials/business of IISL and misuse of funds/books of account.
The watchdog had also passed a confirmatory order in February 2018.
However, it was found that IISL failed to cooperate with the forensic auditor appointed by the BSE on the directions of the regulator.
Also, Sharma, Muraka, Joshi and Bhardwaj as the directors of IISL failed to present true and fair financial statements, executed transactions which were non-genuine in nature resulting in misrepresentation of the accounts/financial statements and misused account/funds of the company, as per Sebi.
Sharma, Muraka and Joshi were responsible for the failure of the company to cooperate with the forensic auditor, Sebi added.
Besides, Sebi observed that IISL failed to give correct timely information about its business activity or any change in business activity to its shareholders/ investors.
The company claimed to have been engaged in investment and loan business as a non-banking financial company (NBFC), but the 2015-16 annual report showed that it was engaged in IT and software business.
IISL had kept the investors in the dark about the true nature of income of the company from interests earned from loans or sale of IT and software products or gain from investments, as per Sebi.
Thus, the misleading information with respect to its business activities and true nature of its income had the potential to mislead the investors and was unfair, the regulator said on Thursday while issuing the directions.
While IISL, Sharma and Bhardwaj have been barred from the securities market for one year, Joshi has been slapped a six-month ban. Muraka has been debarred for three months.
During the period of restraint, the existing holding of securities, including units of mutual funds, of the entities would also remain frozen, Sebi said.