SEBI identifies stocks of 331 companies to be traded in special category

In a letter to the exchanges, the Securities and Exchange Board of India (SEBI) has said that it has identified 331 companies that should be traded in a special category.

The stocks of these companies will be traded only once a month, sources close to the development have told Moneycontrol. The step has been taken by the markets regulator on directions of the finance ministry in an effort to identify shell companies, sources added.

According to the sources cited above, the list of these 331 stocks largely comprises mining and infrastructure companies. A public announcement on the same is expected soon.

The regulator has also asked the exchanges to conduct an independent audit of these companies, and if necessary, a forensic audit to be conducted as well.

The margin money on the trades carried out on these stocks would be more than 200 percent, as per the SEBI letter, in a move to discourage traders to bet on them.

Once the directive from the regulator is effective, anyone selling these stocks will get the proceeds only after five months. And if promoters of these companies sell their stocks in the market, depositories will take a note of the transactions and exchanges will scrutinise them.

The PM Narendra Modi-led government has been cracking the whip on shell companies in a move to clean up the system.

On July 1, while addressing a gathering of chartered accountants, PM Modi said the government has deregistered and shuttered more than 1 lakh companies with doctored accounts. He added in a stern message that the government will come down heavily on tax dodgers who refuse to come clean despite repeated warnings.

In another incident on April 1, the Enforcement Directorate launched a country-wide operation and conducted searches at 100 locations in sixteen states as part of its crackdown on shell companies.

In his Budget 2017, the Finance Minister Arun Jaitley announced tweaking of rules relating to long term capital gains tax to make it harder for high networth individuals who launder black money. As per the change notified, now only those investments in equities are eligible for long term capital gains, where securities transaction tax has been paid.