Indore: SEBI black lists 3 city-based shell companies for unfair practices

Indore: Taking strict action against shell companies, stock market regulator Securities and Exchange Board of India (SEBI) has identified 331 listed companies indulged in unfair trade activities. Prima facie three companies from the city belong to black list. Shell companies are a non-trading company used as a vehicle for various financial manoeuvres or kept dormant for future use in some other capacity.

Internal investigations against shell companies have started yielding evidence of their indulgence in unfair trade activities. Silent investigation started by Serious Fraud Investigation Organization (SFIF) and income tax department has availed basis to act against them.

Sometimes ago both agencies have submitted their investigation report on such companies to ministry of corporate affairs (MCA). Through a letter written by integrated surveillance department of SEBI on Monday to managing directors and chief executive officers (CEOs) of the BSE, NSE and Metropolitan Stock Exchange of India, the agencies have passed instructions about the listed companies.
Corporate sources in the city, citing the official documents of SEBI informed that three companies in the list are from Indore, while there are some companies which operates from the city, but their registered corporate head office is located in Mumbai or any other city.

The black listed companies are: Premium Capital Market and Investment, located at Starlit Tower, YN Road, Infraquest International based at Onam Plaza, near Industry House and Signet Industries. Though registered head office of Signet Industries is at Mumbai, but its operations are based in the city from their office at Dewas Naka.

SEBI has instructed all the three exchanges that trading in such listed securities shall be placed in stage VI of the Graded Surveillance Measures (GSM) with immediate effect. Under the stage VI of GSM, trading in these identified securities shall be permitted to trade once in a month under trade to trade category.

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 from the buyer, which shall be retained with exchanges for a period of five months.

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 and they shall not be allowed to transact in the security except to buy securities in the said listed companies until verification of credential/fundamental by exchanges is completed. SEBI has also instructed the stock exchanges to initiate a process of verifying the credentials/fundamentals of such companies. Exchanges shall appoint an independent auditor to conduct audit of such listed companies and if necessary, even conduct forensic audit of such companies to verify its credentials-fundamentals. If exchanges find inappropriate credentials-fundaments exchanges can initiate the proceedings for compulsory delisting of the companies.

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