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Shell cos list: SAT quashes BSE's order against SVC Industries

twitter-logo PTI        Last Updated: May 27, 2019  | 22:22 IST

New Delhi, May 27 (PTI) The Securities Appellate Tribunal Monday quashed BSE's order against SVC Industries rejecting the firm's plea seeking its removal from list of suspected shell companies. "...the impugned order passed by the BSE cannot be sustained and is quashed," the tribunal said in an order. Besides, the tribunal directed Sebi and BSE not to place the firm in the category of a shell company or place it in GSM (Graded Surveillance Mechanism) Stage VI. "It is however open to Sebi or BSE to take such action in accordance with Sebi Act or its regulations for placing the appellant (SVC Industries) in GSM Stage or to compulsory delist the company", among others, but such action could be initiated only in accordance with the law, the tribunal noted. In August 2017, SVC Industries had filed an application to the BSE, requesting it to remove the firm from suspected shell companies list and also from GSM Stage VI. The exchange in March 2018 rejected the application, following which SVC Industries approached the tribunal. In 2017, Sebi had directed bourses to initiate action against 331 listed firms suspected to be shell companies after the Corporate Affairs Ministry shared a list of suspected shell entities. SVC Industries featured in that list. The markets regulator asked the bourses to keep the shares of these 331 firms in GSM with immediate effect. Placing shares of a firm in GSM restricts their trading. In the order, the tribunal said that before branding the firm as a shell company, it was obligatory on the part of SEBI as well as BSE to investigate and find out whether the firm is a shell company or not and only thereafter Sebi was required to take action. However, no investigation has been done to find out whether the firm is a shell company or not, the tribunal noted, and rejected Sebi as well as BSE's argument that they were not required to investigate. "Contention that Sebi and BSE were not required to investigate as to whether the company is a shell company or not is totally erroneous," the tribunal said. Moreover, the desired information was provided by the firm to the BSE and thus, there was no reason for SVC Industries to continue in the GSM Stage VI category, it added. Accordingly, the tribunal quashed the BSE's order against SVC Industries. PTI VHP RVK RVK

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