SEBI listed Suspected Shell Companies

Update, 11th August 2017:

With regard to further developments on the below information, The Securities Appellate Tribunal (SAT) on Thursday stayed restrictions imposed by the Securities and Exchange Board of India (Sebi) on shares of J Kumar Infra projects and Prakash Industries, which were among the 331 companies suspected to be ‘shell companies’.

The Tribunal, which hears appeals against orders issued by Sebi, also criticized the capital market regulator for passing orders against the companies without investigations.

SAT has directed stock exchanges to allow trading in shares of both the companies with effect from today.

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SEBI has recently decided to freeze trading of 331 shares in NSE and BSE that are suspected to be shell companies. The list of companies can be found in the following link http://bsmedia.business-standard.com/_media/bs/data/general-file-upload/2017-08/List.pdf

Trading in all such listed securities, Sebi said, shall be placed in Stage VI of the Graded Surveillance Measure (GSM) with immediate effect.

Under the stage VI of GSM framework, trading in these identified securities shall be permitted only once a month under trade to trade category (first Monday of the month). Trading in these firms has been suspended this month.

SEBI has also capped the upward price movement at the level of the last-traded price for these stocks. Those who want to buy these stocks will have to make a deposit equal to double the value of the trade. This amount will be retained by the exchanges for five months.

There has been some confusion regarding the accuracy of the list as some of the companies in the list cannot be considered as shell companies as they have carrying out business for a long time. They could have been on the list due to some transactions carried out.

Therefore, we advise you to go through the list of companies and check if you have invested in any of the companies present in the list. Our advise would be to exit from the company that may be present in the list at the immediate opportunity till there is further clarification.

There are also reports that out of the 331 companies identified by SEBI, trading in 12 companies in the stock exchanges might resume as early as next week.

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