As per the arrangement worked out after a meeting between the finance secretary, SEBI chairman DR Mehta and DCA secretary TS Krishnamurthy last Friday, the markets regulator will furnish to the DCA from time-to-time the list of companies which have disappeared with shareholder money, and the DCA, on receipt of such information, will take action against these firms.

Vajpayee's statement at the Federation of Indian Chambers of Commerce & Industry (Ficci) annual general meeting had led to confusion, with SEBI claiming that it had no jurisdiction to take action against vanishing firms as it did not have powers to regulate end-use offunds by promoters.

This led to Kelkar calling for a meeting with the heads of SEBI and the DCA to thrash out the matter lest the government suffers a loss of face. At the meeting, Mehta is said to have reiterated that SEBI has no powers to take action against such firms.

All it can do under the listing agreement is to slap a fine of Rs 1,000 on the companies for failure to furnish statements on time, and this would be a ridiculous way to take action against them. SEBI got to know of a company's antecedents only when it came for listing, while the DCA was in the know of these facts when granting the certificate for registration and then the certificate for commencement of operations.

SEBI could, however, through the stock exchanges ascertain a list of companies who have not filed statements to the bourse for a considerable period.

After a physical check on such companies, it could find out whether they continued to exist. SEBI had earlier sent to the DCA a list of 17 companies, and it is learnt thatat this meeting it was pointed out that the regulator had drawn up another list of 38 companies which have vanished.

SEBI also urged the DCA to take action against such companies by invoking sections of the Companies Act pertaining to mismanagement.