SAT stays Sebi's stock trading ban for 2 companies

SAT stays Sebi's stock trading ban for 2 companies”

At the opening session, the stock hit its lowest trading permissible limit for the day.

The Securities Appellate Tribunal (SAT) has directed bourses BSE and National Stock Exchange (NSE) to reverse their decisions to suspend trading of J Kumar Infraprojects and Prakash Industries.

Shares of J Kumar Infraprojects and Prakash Industries have locked at 20 percent lower circuit in the opening trade on Friday post the shares of both the companies start trading on the indices after they were declared as shell companies.

The list of 331 suspected shell companies brought out by capital markets regulator Sebi ironically includes many going concerns, even those that are doing business with the government.

The companies also submitted that the regulator got the information from the corporate affairs ministry and subsequently asked the exchanges to investigate and take action without making any investigation.

Of the 331 companies that Sebi has sought action against at least 167 are listed on Bombay Stock Exchange (BSE). The tribunal found that Sebi had passed the order without any investigation.

On Monday, Sebi had issued an order to allow trading of 331 companies once a month as they are suspected to be "shell firms".

According to the companies, without investigating into the suspicion entertained by the MCA that 331 companies could be shell companies, Sebi could not have issued the impugned communication without giving an opportunity of hearing.

Sebi said that any delay or hurdle in investigation due to non-cooperation by any entity is detrimental to the interest of investors in securities market and the same would be visited with a penalty. Out of the 331 companies on the list, more than 160 are actively traded shares on the exchanges. "We are not a shell company and we have complied with all the rules and regulations and not evaded any tax", Parsvnath chairman Pradeep Jain said. J Kumar Infraprojects is a Mumbai-based infrastructure company with various engineering, procurement and engineering contracts, Gujarat-based Kavit is a manufacturer and supplier of edible oil, while Parsvnath Developers is a Delhi-based real estate company.

J Kumar Infra also said in its regulatory filing on Monday that it would make efforts to remove its name from the list of shell companies.

Shares of these companies would be moved out of GSM (Graded Surveillance Measures) framework and made available for trading with effect from August 11, the exchanges said in similarly-worded circulars.

Prakash Industries had also said that directions issued by Sebi are "totally devoid of merit and uncalled for". If necessary, even forensic audit could be ordered to verify their credentials and fundamentals.

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