New Delhi: In order to keep a check on vanishing companies the government has asked capital market regulator Sebi to devise ways of monitoring initial public offering (IPO) proceeds.
While the ministry of corporate affairs (MCA), through technical scrutiny of balance sheets, keeps a check if companies are using IPO proceedings as promised in the prospectus, the ministry wants Sebi too to look at the aspect, sources said.
“More coordination is required between the MCA and the Sebi to ensure that the correct information is available regarding how companies use their IPO proceeds. Lot of times companies do not regularly file quarterly results with the registrar of companies, but they do inform stock exchanges, so we have asked Sebi if they could also monitor IPO proceeds,” a senior MCA official told PTI.
The proposal was mooted at a recent meeting of the Coordination and Monitoring Committee (CMC) on vanishing companies, headed by MCA secretary R Bandyopadhay and represented by ministry officials, the Securities and Exchanges Board of India (Sebi) and the Reserve Bank of India (RBI).
At present, sources said, MCA is the only authority that can monitor the end use of IPO money.
In 2009, around 20 companies raised a total of Rs20,000 crore through IPO. In 2010 so far, as many as 16 companies have come out with public offerings, including IPOs and FPOs.