SEBI investigations found that only part of the proceeds from the preferential allotment were received by Aastha and the same funds were re-circulated as the allotment consideration from the five entities

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has ordered permanent freezing of 'illegal' shares allotted by Aastha Broadcasting Network about 12 years ago on preferential basis to five of its promoter entities, on charges of fraudulent market dealing, reports PTI.

The shares allotted to five entities -- Chneena Impex Pvt Ltd, CEEAN Impex Pvt Ltd, Smitasha Impex Pvt Ltd Prarekha Exim Pvt Ltd and Bicharshil Traders Ltd -- would remain frozen permanently, SEBI said in an order.

SEBI said the preferential allotment was 'irregular and illegal'. It added that the allotment itself was found to be 'fraudulent'.

According to the regulator, if the "illegally allotted shares" are not frozen permanently, there is every likelihood of those shares being offloaded into the market, which would disturb the equilibrium.

In 2000, the company had allotted 93 lakh shares to various entities on preferential basis. Out of the total, 51 lakh shares were given to five entities.

BSE found that Aastha issued 93 lakh shares on preferential allotment to various entities, where some of them appeared to be related to each other as well as with Aastha.

However, stock exchange BSE was not satisfied with responses of Aastha regarding queries about full consideration from the allottees in respect of preferential allotment.

Later, SEBI investigations found that only part of the proceeds from the preferential allotment were received by Aastha and the same funds were re-circulated as the allotment consideration from the allottees.

In an interim order in January, 2004, SEBI had prohibited the preferential allottees and other entities -- to whom the shares had been transferred by the allottees -- from buying, selling or dealing in securities of Aastha.

SEBI, in its final order in September 2005, prohibited Aastha and other 39 entities from dealing in securities market.

"Since these tainted shares are already dematerialised, the circulation of these shares in the market through trading or otherwise transfer can be prevented by freezing them permanently," SEBI said.

"If this is not done, the noticees who got the shares fraudulently might offload those shares in the market and reduce the value of the existing shareholders. It will also shake the investor confidence," it added.

Formerly known as CMM Broadcasting Network, Aastha broadcasts various spiritual and religious programmes. It broadcasts programmes in Hindi, Gujarati and English.

Currently, shares of Aastha are suspended on the BSE due to penal reasons.