Capital Markets Regulator SEBI is set to auction off properties belonging to two companies in an effort to reimburse investors. Slated for April 16, 2021, the auction will feature properties from Ravi Kiran Realty India and GSHP Realtech, with a combined reserve price exceeding Rs 5.4 crore. This action by SEBI underscores its commitment to recovering funds for investors who were affected.
In the period of 2012-13, GSHP Realtech, which is based in Kolkata, accumulated capital from 535 individuals through the issuance of Non-Convertible Redeemable Debentures or NCDs. Concurrently, Ravi Kiran amassed funds from 1,176 individuals by offering Redeemable Preference Shares (RPS).
Unauthorized Fundraising
It is important to note that GSHP Realtech and Ravi Kiran Realty engaged in fundraising activities without obtaining the mandatory authorization from the market regulator. Consequently, in both 2015 and 2016, SEBI issued directives to GSHP Realtech and Ravi Kiran Realty, instructing them to reimburse the funds received from investors.
However, these entities either failed to comply with the repayment orders or did not fully return the money to investors. As a result, the regulatory authority initiated proceedings to recover the funds from the entities.
In a public notice issued on Thursday, SEBI announced its intention to conduct an e-auction to facilitate the sale of properties owned by GSHP Realtech Limited and Ravi Kiran Realty India Limited, utilizing an established e-auction platform.
Varied Property Prices at Auction
According to official details released by the Securities and Exchange Board of India (SEBI), the auction is scheduled to occur via online platform on April 16th.
Concerning Ravi Kiran Realty, SEBI is auctioning all four properties with a total base price fixed at Rs 2.68 crore. In the parallel case of GSHP Realtech, the regulator will auction two properties marked at a base price of Rs 2.88 crore. The properties slated for auction primarily consist of land parcels, predominantly located in the state of West Bengal. Potential bidders are strongly advised to perform thorough, individual investigations concerning any encumbrances, ongoing litigations, attachments, and other relevant obligations tied to the assets before submitting their bids for the properties offered at auction.
SEBI has stipulated that prospective bidders are required to submit their bids along with a deposit equivalent to 10 percent of the reserve price for each property. This is considered as earnest money deposit (EMD).
The victorious bidder is obligated to deposit 25 percent of the winning bid amount, inclusive of the EMD, immediately following the conclusion of the auction. The remaining balance, in addition to 1 percent of the maximum bid designated as commission, must be remitted within a span of 15 days from the end of the auction.