Markets regulator Sebi on Friday barred as many as eight “vanishing” companies and 40 directors from accessing the capital market for the next five years for violating listing agreement.
Vanishing companies are those that failed to file statutory returns with the Registrar of Companies and stock exchanges for two years. Besides, the companies and their directors are not traceable.
The companies --Marine Cargo Company, Ambuja Zinc, Hitesh Textile Mills, Manav Pharma, Sequel Soft India, Shree Yaax Pharma & Cosmetics, Rusoday & Company and Sterling Kalks and Bricks -- have been barred from the capital markets. Apart from this, 40 directors have been prohibited from the capital markets.
These eight firms failed to comply with the requirement of listing agreement.
The directors of Rusoday & Company have resigned from its board two decade ago, while Sterling Kalks and Bricks’ directors were exonerated from the charges in 2004.
In an order passed on Friday, Sebi directed “the companies and their directors...to disassociate themselves in every respect from the capital market related activities”.
They have been directed not to “raise funds from the capital market, not to deal in securities and not to be or be associated with any of the intermediaries in the capital market, in whatsoever manner, for a period of five years from the date of this order”.
The Securities and Exchange Board of India (Sebi) said that non-existence of such companies is a matter of grave concern. These violations and non-traceability of these firms are detrimental to the interest of investors and to the integrity of securities market.
“Besides, they have also eroded the confidence of the investors and credibility of the capital market, which calls for suitable action.
“Therefore, it would be appropriate in the interest of investors and for healthy development of the securities market that the companies and directors thereof should not be allowed to deal in securities or to access the capital markets in future,” it added.