Market regulator SEBI initiates action against 331 shell firms
Trading in shares of these companies will be halted from Tuesday and will only be allowed on the first day of every month
The Securities and Exchange Board of India has directed the country's two major stock exchanges--the National Stock Exchange and BSE—to initiate action against 331 suspected shell companies named by the Ministry of Corporate Affairs. In a circular issued to the exchanges late Monday, the securities regulator has directed the exchanges to place the shares of these 331 alleged shell companies under stage VI of their Graded Surveillance Measure from Tuesday.
Under stage VI of the exchanges' graded surveillance measure, trading in shares of these companies will be halted from Tuesday and will only be allowed on the first Monday of every month. "Further, any upward price movement in these securities shall not be permitted beyond the last traded price and additional surveillance deposit of 200% of trade value shall be collected form the Buyers which shall be retained with Exchanges for a period for five months," the circular said.
The order has asked exchanges to initiate a process of verifying the credentials of the companies named in the list. "Exchanges shall appoint an independent auditor to conduct audit of such listed companies and if necessary, even conduct forensic audit of these companies to verify its credentials," the circular said.
If exchanges do not find appropriate credentials for these companies then they will initiate proceeding for compulsory delisting against the company, and the said company will not be permitted to deal in any security on exchange platform and its holding in any depository account will be frozen until such delisting process is completed, the circular said.
BIG NAMES: Parsvnath Developers, SQS India, J Kumar Infra and Prakash Industries figure among 331 "suspected shell companies", referred to market regulator Sebi by the government and facing probe for alleged tax evasion
and other frauds, even as they denied any wrongdoing on their part. The benchmark Sensex slumped 260 points while the Nifty cracked below the crucial 10,000-mark.