Sebis scanning of shell companies creates problems for investors, banks
Market watchdog identified 331 listed firms as suspected shell companies. Various measures are taken by the regulator in tackling the black money.
Key Highlights:
- SEBI identifies 331 suspected shell companies
- Few companies managed to have interim relief by SAT
- Sebi has begun to issue show-cause notice
The Securities Exchange and Board of India (Sebi) is trying to identify shell companies to tackle black money in India. But it turns out that the problem of identifying a “shell company” is not as small as it looks.
A shell company is an entity without any active business operations or significant assets. They are often created to avoid taxes and many big companies create shell corporations to avoid taxes without attracting legal actions.
Among the suspected shell companies – a list of 16 companies alone hold nearly Rs 9,000 crore market capitilisation on BSE. Moreover a total of 161 companies have over 2.7 million public shareholders.
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