Skip to main content

Sebi asks bourses to act against 331 suspected shell companies


Sebi today directed bourses to initiate action against 331 suspected shell companies that are listed and these scrips will not be available for trading this month, according to a communication.
The regulator's directive came after the corporate affairs ministry shared a list of 331 listed companies that are suspected to be shell entities and could even face "compulsory delisting".
Stepping up the surveillance measures, these entities would be subject to independent audit and if required, forensic audits could also be initiated to check their credentials.
In a communication sent to the BSE, the NSE and the Metropolitan Stock Exchange, the markets regulator has asked them to keep the 331 shares in stage four of the Graded Surveillance Mechanism (GSM) with immediate effect.
Securities coming in stage four are permitted to trade only once a month under trade to trade category.
Since these shares would be moved to stage four from tomorrow, these securities would not be available for trading this month.
"Trading in these securities shall be permitted once a month (first Monday of the month)," the communication said.
Further, any upward price movement would not be permitted beyond the last traded price while additional surveillance deposit of 200 per cent of trade value would be collected from the buyers. This amount would be retained by the exchanges for five months.
A part from initiating a "process of verifying the credentials/ fundamentals of such companies", the exchanges have also been asked to appoint an independent auditor to carry out audit of these entities. If necessary, even forensic audit could be ordered to verify their credentials and fundamentals.
On verification, if the bourses do not find appropriate credentials or fundamentals about existence of these companies, they proceeding for "compulsory delisting" would be started.
Besides, these entities would not be permitted to deal in any security on exchange platform and its holding in any depository account would be frozen till such delisting process is completed.
"The shares held by the promoters and directors in such listed companies shall be allowed to be transferred by depositories only upon verification by concerned exchanges," the communication said.
They would not be allowed to transact in the security except to buy shares in the particular listed company until verification of credential is completed.
Out of the list of shell companies, if securities of any of the listed company are under suspension, the trading in such securities shall be placed under stage four of the GSM directly on revocation of suspension, Sebi has told the exchanges.
As part of efforts to curb the black money menace, the corporate affairs ministry has already cancelled the registration of more than 1.62 lakh companies that have not been carrying out business activities for long.
The ministry is implementing the Companies Act and firms are required to be registered under this law.
While the term 'shell company' is not defined under the Companies Act, Corporate Affairs Minister Arun Jaitley, last month, told the Lok Sabha that many such entities have been found to be indulging in large scale tax violations.
"However, the Registrars of Companies (RoCs) have removed 1,62,618 companies from the register of companies as on July 12, 2017 after following the due process under Section 248 of the Companies Act, 2013," he had said.
The Business Standard, New Delhi, 08th August 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…