Investigation agencies identified 13000 shell companies before SEBI ban, say sources

Investigation agencies have identified more than 13000 shell companies post demonetization, according to two sources who to spoke to Moneycontrol on condition of anonymity. The Income Tax Department, Enforcement Directorate, the Central Bureau of Investigation and the Serious Fraud of Investigation Office had sent their individual lists to the Financial Intelligence Unit (FIU) which had compiled them. The source added that this list was made before SEBI’s ban this Monday halting trading in 331 ‘shell companies’.

The Securities and Exchange Board of India (SEBI) on Monday placed trading curbs on 331 stocks of firms suspected to be shell companies. Of these, 162 are actively traded while 169 had already been suspended for various violations of the listing agreements.

Another source told Moneycontrol that this comprehensive list included the 331 companies that SEBI had banned trading in.

The basis on which the Ministry of Corporate Affairs short-listed 331 companies from the larger list is not known yet.

A source who is privy to the development told Moneycontrol: “Among the 13000 companies, some of them are listed while most aren’t. Mainly, these companies are from West Bengal.”

A senior official of Enforcement Directorate told Moneycontrol that they had shared the list of companies which had indulged in tax evasion and money laundering. The agencies have started taking action, the source added. There has been mutual sharing of information happening between the investigative agencies.

After November 8 last year when popular Rs 500 and Rs 1000 were made illegal, investigation agencies started cracking down on shell companies. The Prime Minister Office is closely looking into this clean-up drive with help from the Ministry of Corporate Affairs.