Panel wants tighter Sebi control on plantation companies

NEW DELHI, JULY 8: The Dhanuka Committee has recommended the issue of an ordinance to empower the Securities and Exchange Board of India to regulate plantation companies. The panel has emphasised the need to issue an ordinance with a sense of urgency to “curb the growing evil emanating from collective investment schemes”.

The government had clarified through a press release that collective investment schemes are within the purview of Sebi Act, 1992. The committee has pointed out the inadequacy of this measure, referring to the writ petitions in the courts which contend that plantation companies are not within the jurisdiction of Sebi. The argument against Sebi’s jurisdiction is that these companies do not operate in the securities market and the bonds issued by them do not constitute securities.

The committee suggests that the government should issue an ordinance which clarifies that the collective investment schemes are within the range of the definition of the expression securities and whatever be thenature of document issued by these companies, these would constitute securities.

The committee has widened the definition of the term “securities” and has suggested that there should be specific provisions in the new legislation directing other authorities like department of company affairs, registrar of companies, Reserve Bank of India, income tax department and police to co-operate with Sebi. The committee has recommended sweeping powers for Sebi including: enquiry and investigation.