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Journalism of Courage
The Central Board of Direct Taxes (CBDT) and the Enforcement Directorate are preparing appraisal reports on private placements and how it is being used as the new mode of converting black money into white,a finance ministry official told The Indian Express.
The CBDT has already detected unaccounted income of Rs 1,350 crore,apparently generated through the new modus operandi of privately placing the shares,the official said.
The CBDT has submitted a few reports to the Central Economic Intelligence Bureau,the nodal agency for coordinating intelligence in the area of economic offences. The reports contain details of the masterminds,the purpose of the private placement,the return received on the investment along with other vital information,the official added.
Several companies have been raising money through the mechanism as the disclosures and procedural stipulations are relatively less when compared with a public offer.
The most recent case is that of Sahara Group wherein the Supreme Court has asked two group firms to refund the money collected from investors through the issuance of optionally fully convertible debentures. As per Section 67 of the Companies Act,1956,when a company makes an offer for shares to 50 or more people,the company has to file a prospectus with proper disclosures.
Several unlisted companies,however,have been raising money through private placement route by offering securities to friends,associates or other persons,without getting listed.
