Sebi orders forensic audit of 2 shell firms
Stepping up its crackdown on suspected shell firms, the Securities and Exchange Board of India (Sebi) has ordered forensic audit of two listed firms—Kavit Industries and GV Films—even as it eased some trading curbs on their shares.
In case of GV Films, the regulator stated that the “balance sheet is disproportionate to the profit and loss of the company” that warrants an independent audit of its asset and liability, even as “there appears to be no prima facie evidence of misuse of the books of the company”.
Regarding Kavit Industries, Sebi said there is prima facie evidence of misrepresentations by the company and violation of listing norms, as also about misuse of funds and books of accounts.
Stating that the company’s directors and top management have failed to discharge their fiduciary responsibilities, the regulator said they are “prima facie liable for action by Sebi and should not be permitted to exit the company at the cost of innocent shareholders”. Besides ordering a forensic audit, Sebi also barred Kavit’s promoters and directors from selling the company’s shares, though they can purchase the scrips.
The ordered trade restrictions—allowing trade only once a month and that too for only buy transactions with a 200% security deposit—were revoked in some cases following appeals filed by them with the Securities Appellate Tribunal, but Sebi was asked to continue with its probe as well as pass its orders expeditiously.
Meanwhile, Sebi on Tuesday barred 19 domestic and foreign entities, including K Sera Sera and Asahi Infrastructure and Projects Ltd, from securities markets for manipulation in issuances of global depository receipts (GDRs) and warned several others, including foreign institutional investors (FIIs)