The Securities and Exchange Board of India has barred eight “vanishing” companies and 40 directors from accessing the capital market for the next five years for violating the listing agreement.
The companies are: Marine Cargo Company, Ambuja Zinc, Hitesh Textile Mills, Manav Pharma, Sequel Soft India, Shree Yaax Pharma & Cosmetics, Rusoday & Company and Sterling Kalks and Bricks. Apart from this, 40 directors have been prohibited from the capital markets. Vanishing companies are those which 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.
These eight firms failed to comply with the requirements 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”.
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.