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'SEBI can crosscheck records of RoCs'
By agencies
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Tuesday, 17 January 2006, 20:30 IST
NEW DELHI: The Ministry of Company Affairs has suggested to the capital market regulator Securities and Exchange Board of India (SEBI) that it could crosscheck the records of the companies wanting to float an initial public offer (IPO) with the Registrar of Companies (RoCs), whenever required.
The Central Co-ordination and Monitoring Committee (CMC), co-chaired by the SEBI Chairman and Secretary, Company Affairs, has said that SEBI could crosscheck the records with RoCs before giving its go ahead in order to ensure investors' interests, a Ministry official said.
This step has taken by the regulator because it was found that a number of companies, which had come out with an IPO and then vanished, had furnished a different set of records - balance sheet - with the RoCs and SEBI. While the information available with SEBI gave different numbers, the one available with the RoCs states different story, raising doubts on the company's credentials, the official elaborated.
Besides, the ministry is implementing an e-governance project under which the identity of authorized directors and professionals is ensured in a secure manner, the official said. Refusing to disclose the names of such companies, the official said, a list is being prepared and would be made available to the Serious Fraud Investigation Office (SFIO).
At present, 114 companies stand identified as vanishing companies with issue size of approximately $181.66 million. Originally, 229 companies were identified as vanishing companies which came out with IPOs during the period 1992-1998, out of which 71 companies are such which came out with IPOs during 1993-95 for raising a sum of $138.10 million from the public.
The Government has taken action against the vanishing companies and their promoters/directors by filing prosecutions through the RoCs under the Companies Act 1956 in respect of 107 companies out of a total of 114 vanishing companies. In addition, FIRs have also been filed in respect of 100 companies and their promoters/directors for the offences punishable under the Indian Penal Code.