Shell Companies Case: SAT Stays SEBI Order On Another Six Companies
The SAT has now reversed SEBI’s directions on eight companies.
The Securities Appellate Tribunal on Friday granted relief to six companies by ordering SEBI to lift trading restrictions on their shares, days after the regulator suspended trading in them on the basis that they were ‘shell’ companies.
The tribunal, after the hearing, directed the bourses, BSE and NSE, to resume trading in these six stocks from Monday, August 14, according to a circular on the Bombay Stock Exchange. The companies which have been moved out of the graded surveillance list are as follows:
- Signet Industries Ltd.
- Pincon Spirit Ltd.
- Parsvnath Developers Ltd.
- SQS India BFSI Ltd.
- Kavit Industries Ltd.
- Kkalpana Industries Ltd.
Kavit Industries and Kkalpana Industries are only listed on the BSE, while the other four are listed on both exchanges.
Similar orders had been passed for J Kumar Infraprojects Ltd. and Prakash Industries Ltd. on Wednesday where SAT called out SEBI saying that it was apparent that the order was given without any investigation.
These were among the 162 listed entities that the Securities Exchange Board of India had placed in a restricted trade category on the basis that they are shell companies as identified by the Ministry of Company Affairs. As of August 8, the shares of the 162 companies could be traded only once every month under the trade-to-trade category with certain other restrictions, according to a communication by SEBI.
Some of these companies boast of high-profile investors – Rakesh Jhunjhunwala holds just over 1 percent in Prakash Industries, and Kalpraj Dharamshi owns 1.6 percent in SQS India. Indian mutual funds hold over 11 percent in J Kumar Infraprojects, while foreign portfolio investors hold 27 percent. Fidelity Securities Fund owns over 4 percent of Parsvnath Developers.