As many as 1,313 “listed” entities that have failed to file their annual reports for two years face the prospect of being struck off the registrar of companies’ (RoC) database.
As many as 1,313 “listed” entities that have failed to file their annual reports for two years face the prospect of being struck off the registrar of companies’ (RoC) database. The move is a continuation of the ministry of corporate affairs’ (MCA) efforts to weed out shell companies.
A senior ministry official observed that while the companies were categorised as “listed”, in reality most of them were not. Consequently, their status will be altered from “listed” to “unlisted” before they are struck off.
“They might have sought permission from the MCA to file draft prospectuses for initial public offerings (IPOs) but did not complete the process. That is why they are categorised as ‘listed’,” the official explained.
In May, the government had asked the Securities and Exchange Board of India (Sebi) for a “status” report on these companies. The market regulator was able to trace 911 firms but discovered that another 402 were not listed on any of the bourses. Of the 911 firms, Sebi found that 335 have been delisted while 73 are vanishing companies. Around 80 were on the dissemination board of the BSE and NSE, while 405 continued to be listed. Another 18 firms are limited by guarantee or private limited companies.
The MCA is empowered to strike off the delisted firms (330 on BSE and 5 on NSE) as well as 18 private limited or companies limited by guarantee. However, it must wait for Sebi to act before it can take action against the remaining 558 firms. Of the 80 companies on the dissemination board, 33 are on the NSE and 47 on the BSE.
Sources said Sebi has already referred 52 of them (29 from BSE and 23 from NSE) to MCA for declaring them as vanishing companies after finding them “not-traceable.” In addition, regional stock exchanges have requested the MCA to declare other 73 companies vanishing.
Of the 405 companies still listed, 288 are suspended companies. Sebi has asked the exchanges to complete the delisting process against these companies by June-end. Of the listed companies, 38 are listed and still active. Since Sebi can not take action against these companies, MCA may initiate appropriate action against these companies for not filing the required documents. Sources said Sebi has initiated the process of compulsory exit of the remaining 79 companies, listed on the CSE. Exercising its powers under Section 248 of the Companies Act, the ministry of corporate affairs has already struck off over 2.5 lakh unlisted entities not filing the requisite documents.