Sebi Asks Brokers to Verify Data of 107 Unlisted Firms
Mumbai: The Securities and Exchange Board of India (Sebi) on Friday asked brokers to verify the credentials and fundamentals of 107 unlisted companies that are suspected to be shell companies.
Brokers, who have registered any of the 107 companies as clients, have been asked to seek auditor’s certificate from these companies with information on status of filing of income tax returns for the last three years and pending disputes with the I-T department.
If the verification of credentials is not found satisfactory, their Unique Client Codes should be temporarily disabled by the exchanges and a report on the same should be submitted to Sebi, the BSE said in a circular. A Unique Client Code serves as an exclusive identification of anybody trading in the market and brokers have been mandated to use UCC which is linked to the PAN details of a client. The UCC helps brokers maintain database of their clients.
The list of 107 includes Nonstop Plantation, Sapoi Tea, Balashri Commercial, Tripurari Finvest, Swastik Securities , Snow White Metal, Satyam Projects, Exim Finance, Denim Developers and Kalpataru Engg, among others.
Earlier this week, the markets regulator had released a list of 331 suspected shell companies identified by the Ministry of Corporate Affairs and directed exchanges to restrict trading in them. Since then, the Securities Appellate Tribunal (SAT) has lifted restrictions on some of the companies. The BSE has asked brokers to do the due diligence based on the auditor’s certificate and submit a report to the exchange by August 31. The auditor's certificate should give information on status of these companies with requirements of the Companies Act and annual returns filing during the last three years.
The auditor’s certificate will also need to mention whether the company is a going concern and provide description of its business model. The certificate will also need to provide bank statements of last one year with active or dormant status and the status of the company with respect of default to any bank or financial institution.