24 vanishing cos. to be delisted

By Our Legal Correspondent

NEW DELHI, JUNE 2. The Department of Company Affairs (DCA) in the Ministry of Law, Justice and Company Affairs, has decided to delist 24 companies, which had vanished after mopping up crores of rupees from the capital market.

The DCA has addressed letters to the chief secretaries of various States and Union territories to order prosecutions including police action against these vanishing companies, which had cheated gullible investors.

This is a sequel to a meeting Dr. P. L. Sanjeev Reddy, Secretary, DCA, had with the officials of the Security and Exchange Board of India (SEBI) in Mumbai on Thursday.

At the meeting, the number of vanishing companies was shortlisted to 24 from 142 last year. Of the 24 companies, five are in Tamil Nadu, three in Gujarat, eight in Delhi, six in Madhya Pradesh and two in Orissa. Besides the delisting of these companies, multipronged actions have been initiated against other such companies which have been tracked but otherwise are defaulting on account of not filing their annual returns as also for cheating the investors. Action is being taken under the Companies Act, the Reserve Bank of India Act and the SEBI Act.

According to DCA sources, during 1993- 94 and 1994- 95 when many new companies tapped the capital market and collected funds from the public through issue of shares/debentures and fixed deposits. But many of these companies defaulted in their commitments made to the public while mobilising funds. Some of these companies are not even traceable. The SEBI has identified 159 listed companies which collected funds through public issue and are not available now at their registered offices.

A list of such companies was also sent by SEBI to the DCA. Though, it is for the concerned stock exchanges where the shares or debentures of these companies are listed to ensure that the companies comply with requirements under the listing agreements and the primary responsibility to monitor the working of such listed companies vests in SEBI/stock exchanges, instructions were issued by the department to its field organisations with a view to take timely action for violation, if any, of the provisions of the Companies Act, 1956 and to enlist assistance of police authorities and general public to ascertain the whereabouts of such companies. The reports received from the field organisations revealed that names of 17 companies in the list were repeated twice, leaving 142 companies in the vanishing category.

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Section  : Business
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