1. Shell companies: SAT asks Sebi to probe cases, lifts trading curbs on 6

Shell companies: SAT asks Sebi to probe cases, lifts trading curbs on 6

The Securities Appellate Tribunal (SAT) today lifted the Sebi's trading curbs on shares of six suspected shell entities, including Parsvnath Developers, and asked the regulator to hear them and also probe their business operations.

By: | Mumbai | Published: August 11, 2017 8:39 PM
Securities Appellate Tribunal, SAT, Parsvnath Developers, Sebi, Sebi's trading curbs, business operations, Parsvnath Developers, suspected shell entities The other five companies which got relief today are Kavit Industries, Pincon Spirit, Signet Industries, SQS India BFSI and KKalpana Industries.

The Securities Appellate Tribunal (SAT) today lifted the Sebi’s trading curbs on shares of six suspected shell entities, including Parsvnath Developers, and asked the regulator to hear them and also probe their business operations. The other five companies which got relief today are Kavit Industries, Pincon Spirit, Signet Industries, SQS India BFSI and KKalpana Industries. The tribunal also modified its yesterday’s stay orders on two other companies — J Kumar Infraprojects and Prakash Industries — and disposed of the case in line with its orders on six other firms today. With this, shares of these companies can now be traded on the bourses. Of the 331 companies listed in the Sebi order, eight approached the SAT. Of the total companies on the list, 160 are actively traded. “In view of the facts set out in the appeal and other documents tendered relating to annual turnover of the appellant for last three years, which, even according to Sebi, prima facie appear to be correct, we extend the stay and direct the exchanges to reverse their decision (to curb trading) as expeditiously as possible,” a three-member SAT bench said in six similar-worded orders. The tribunal also noted that these companies have already made a representation to Sebi against the impugned communication to the regulator by the corporate affairs ministry.

“Sebi is directed to dispose of the said representation in accordance with law,” SAT said, adding the regulator and exchanges can hear these companies and conduct probe into their business operations. “It is made clear that this order shall not come in the way of Sebi as well as the exchanges to investigate the case of the appellant and initiate proceedings if deemed fit,” the bench said. Meanwhile, SAT today also modified its stay orders issued yesterday which lifted trading curbs on shares of J Kumar Infraprojects and Prakash Industries.

In two separate orders, SAT said as Sebi and exchanges are considering representation of these companies “against ex-parte communication of Sebi dated August 7 both the appeals may be disposed of in terms of the order passed on August 10. Accordingly, both the appeals are disposed of in terms of the order dated August 10 with no order as to costs.” Capital market regulator Sebi had on August 7 asked exchanges to restrict trading in shares of 331 suspected shell firms, some of which have several well-known domestic and foreign investors.

The move came after the watchdog received a list of such firms from the corporate affairs ministry. Many of them are under the scanner of the Serious Fraud Investigation Office and the Income Tax Department. The appellants submitted their respective financials, along with other filings, before SAT to establish that they are not shell companies and are in compliance with all regulations.

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