The Securities Appellate Tribunal (SAT) on Thursday stayed the order of capital markets regulator that tagged Prakash Industries and J Kumar Infraprojects as suspected shell companies. The tribunal also directed the stock exchanges to revert the trading ban on these stocks and allow them to trade from Thursday.
The two firms were named in the list of 331 suspected shell firms that were put under stage six of the graded surveillance measure by the bourses after Sebi circular on August 7. These scrips were not available for trading this month.
The regulator’s directive came after the corporate affairs ministry shared a list of 331 listed companies that are suspected to be shell entities. In its petition before SAT, J Kumar Infraprojects had requested that the Sebi direction on trading ban should be stayed with the immediate effect. The company had submitted that Sebi’s trading ban on its shares is arbitrary and unreasonable.
Sebi has informed the tribunal that it has taken only a first time action against the suspected shell companies after the Ministry of Corporate Affairs shortlisted the firms. The regulator said that it has not concluded that the all the companies are shell companies. SAT will now hear another petition filed by Parsvnath Developers on the same issue on August 11.