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Business News/ Market / Stock-market-news/  Sebi bars over 200 entities from accessing securities market
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Sebi bars over 200 entities from accessing securities market

A probe was initiated after noticing a huge rise in the traded volume and prices of these listed entities between 1 January 2013 and 31 December 2014

“Despite having such poor financials during FY2010-11 and FY2011-12, all the companies raised funds through series of preferential allotments during the said period,” said a Sebi order. Photo: MintPremium
“Despite having such poor financials during FY2010-11 and FY2011-12, all the companies raised funds through series of preferential allotments during the said period,” said a Sebi order. Photo: Mint

Mumbai: The Securities and Exchange Board of India (Sebi) on Monday barred 239 entities, including four companies listed on the small and medium enterprises (SME) platform of BSE, from accessing the securities market till further directions, citing market manipulation activities.

Eco Friendly Food Processing Park Ltd, Esteem Bio Organic Food Processing Ltd, Channel Nine Entertainment Ltd and HPC Biosciences Ltd, along with their promoters and directors are among publicly traded companies barred from the market.

Other entities include those which allotted shares by these companies as part of preferential allotment and pre-IPO placements and those which funded the purchase of such shares.

An 80-page order issued late on Monday by Sebi whole-time member Rajeev Kumar Agarwal said the capital market regulator initiated a probe after noticing a huge rise in the traded volume and prices of these listed entities between 1 January 2013 and 31 December 2014.

“On analysis of financial statements of these companies, it was noted that the profit after tax and earnings price per share of these companies had been consistently decreasing from financial year 2012-13 onwards i.e. the period of sharp price rise," says the order adding that “despite having such poor financials during FY2010-11 and FY2011-12, all the companies raised funds through series of preferential allotments during the said period."

Once the companies substantially increased their respective equity share capital base through preferential allotments and bonus issuances, they came out with initial public offers in the year 2013 on the SME segment of BSE, the order said.

According to the Sebi investigations, after the shares of these companies got listed on the SME platform, some of the entities “manipulated the price/volume of the scrips and then provided profitable exit to preferential allottees and pre-IPO transferees."

“I prima facie find that the preferential allottees, pre-IPO transferees acting in concert with funding group and trading group have used the stock exchange system to artificially increase volume and price of the scrip for making illegal gains and to convert ill-gotten gains into genuine ones," says the order.

The acts and omissions were prima facie for generating fictitious LTCG (long-term capital gains) so as to convert unaccounted income of preferential allottees and pre-IPO transferees into accounted one with no payment of taxes as LTCG is tax exempt under section 10(38) of Income Tax Act, 1961, it added.

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Published: 30 Jun 2015, 01:25 PM IST
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