Continuing with its probe, Sebi has now passed interim directions in case of GV Films and Kavit Industries, while more such orders are expected for several others. New Delhi: Stepping up its crackdown on suspected shell companies, market regulator Sebi has ordered forensic audit of two listed firms -Kavit Industries and GV Films -even as it eased some trading curbs on their shares.
In case of GV Films, the regulator said the “balance sheet is disproportionate to the profit and loss of the company“ which warrants an independent audit of its asset and liability, even as “there appears to be no prima facie evidence of misuse of the books of the company».
Regarding Kavit Industries, Sebi said there is prima facie evidence of misrepresentations by the company and violation of listing norms, as also about misuse of funds and books of accounts.
Stating that the company’s directors and top management have failed to discharge their fiduciary responsibilities, the regulator said they are “prima facie liable for action by Sebi and should not be permitted to exit the company at the cost of innocent shareholders“.
Besides ordering a forensic audit, Sebi also barred Kavit’s promoters and directors from selling the company shares, though they can purchase the scrips.
Kavit and GV Films, where trading would now be allowed with applicable price bands and in trade-to-trade category, are among the firms against whom Sebi initiated action last month, by ordering trading restrictions, following receipt of a list of 331 “suspected shell companies“ from the government.
The ordered trade restrictions -allowing trade only once a month and that too for only buy transactions with a 200 per ctions with a 200 per cent security de posit -were re voked in some ca ses following ap peals filed by them with the Se curities Appella te Tribunal, but Sebi was asked to continue with its probe and pass its orders expeditio usly.
Continuing with its probe, Sebi has now passed interim directions in case of GV Films and Kavit Industries, while more such orders are expected for several others.
Sebi received the list from the Ministry of Corporate Affairs (MCA) on June 9, wherein it was asked to initiate necessary action under its regulations. The MCA also shared with Sebi a letter from Serious Fraud Investigation Office (SFIO), containing the database of shell companies along with their inputs.