Based on a study and physical verification undertaken by the stock exchanges on companies which came out with initial public offerings after 1992, Sebi identified 80 companies which were not traced at their registered office address as mentioned in their offer document.

Sebi had issued showcause notices to the promoters/directors who were associated with such companies. Some of these were returned undelivered and some directors responded. The action against the directors, notices to whom were returned undelivered or who gave their replies, is being examined separately. However, directors who have failed to respond to Sebi's showcause notice are deemed to have no explanation to offer and, accordingly, Sebi on Mondayissued an order barring 70 directors from tapping the capital market for a period of five years.

This order would mean that the directors referred above are prohibited from raising resources from the capital market, dealing in securities in any manner and also restricts their association with any capital market intermediary. The order will be effective 30 days from the date of its issue. In case any of the directors referred in the annexure makes a representation within 15 days from the date of the order, the same would be considered by Sebi. The directions have been issued under Section 11/Section 11 B of the Sebi Act to protect the interests of investors in the securities market.

The criterion used by Sebi to term a company as `vanishing' was: Companies which did not comply with listing requirements such as submission of annual reports, schedule of distribution, communication of the record date etc for a period of two years; where no correspondence has been received by the exchange for a long time; andno office of the company is located at the mentioned registered office address.

On Monday, the third meeting of the central coordination committee comprising the Department of Company Affairs secretary, Sebi chairman and their officials reviewed various actions initiated by the task forces.

Complaints related to fixed deposits and other instruments do not come under the purview of the task forces. The list of these 80 companies has already been forwarded to various regulatory authorities for necessary action at their end.

Task forces, comprising officials of the DCA, Sebi and stock exchanges, have been constituted at 7 regions. As recommended by the task forces, action against the delinquent companies like inspection under Section 209A of the Companies Act, 1956, and prosecution for non-submission of necessary returns was considered by the DCA. So far, the inspection process has been initiated against 25 companies, and the process of initiating such an action is in an advanced stage against 12companies. Prosecution has been launched in respect of 43 companies by the DCA. Registrars of companies have also informed the police about cases where cheating was suspected.

Apart from these actions, stock exchanges are also initiating various other actions like filing of winding-up petitions, prosecution for non-compliance with the listing requirements and transferring the trading of such companies to a separate category etc. In order to involve the investing public in the whole exercise of identifying such vanishing companies, the task forces have been advised to take cognizance of information received from public regarding companies which fall within the criteria mentioned above.