As many as 166 of these companies are also facing prosecutions under Section 135 of the Companies Act for non-filing of balance sheets and annual reports. Police complaints have been filed against 33 companies, though there are still 69 companies that continue to remain untraced.
Interestingly, 63 of these companies were found to be regular in filing documents though they had been classified as vanishing companies by Sebi. After the DCA crackdown, 65 companies started filing documents.
The department has sought help from state governments where the companies were located to trace the promoters and directors and take action against them.
The department discovered that as many as 28 companies were under liquidation while two had been seized by the state governments. Two companies have been identified, issued default notices and asked to update their documents. As per Sebi criteria, a vanishing company is one which does not comply with the listing requirement for two years (including filing of annual returns and balance sheets) with stock exchanges (SEs) and registrar of companies, does not submit other required reports to SEs, does not correspond with the regional SE for two years and is not available at its registered office at the time of SE inspection.
DCA had initially initiated prosecution for technical defaults such as non-filing of balance sheet or annual report but later decided to proceed against them for non-compoundable offences (Section 62/63, 68 and 628) under which directors and officers can be imprisoned. Sebi has already debarred 95 companies and 352 directors under Section 11B of the Sebi Act from raising money from the capital market and dealing in capital market in any form for a period of five years.