MUMBAI: The Securities and Exchange Board of India (Sebi) has ordered a forensic audit of three firms — Trinity Tradelink, Info-Drive Software (ISL) and Edynamics Solutions (ESL) — in addition to the four companies it had already brought under the forensic lens.
These seven firms are part of the 331 suspected shell companies’ list that are under the Sebi scanner for violation of norms. The other four firms include IRIS Mediaworks, Hit Kit Global Solutions, Kavit Industries and GV Films.
Of the 331 firms, Sebi eased norms to some companies following appeals against the ruling. In others, the Securities Appellate Tribunal asked the regulator to continue with its probe and pass orders expeditiously.
The regulator found the companies identified as shell companies were potentially involved in misrepresentation including of their financials and business in violation of listing regulations.
In three separate orders issued on Wednesday, Sebi noted that prima-facie, the three firms were involved in misrepresentation of books of accounts. In the interest of investors, it said the regulator believes the financials of these companies should be independently audited to establish their genuineness.
Accordingly, Sebi has asked exchanges to appoint independent auditors to conduct a forensic audit of these firms for verification, including their credentials.
Besides, promoters and directors of the firms have been allowed only to buy securities of these companies. However, the shares held by them in these firms would not be allowed to be transferred for sale by depositories.
Pending the audit, trading in securities of ESL and ISL would be reverted to T and XD group of BSE, respectively, with applicable price band.
“The trading in securities of TTL shall be reverted to the status as it stood prior to issuance of letter dated August 7, 2017 by Sebi,” the regulator noted.
Similarly, Sebi said there was prima-facie evidence that ESL has not deployed the proceeds of the IPO in accordance with the objects of the public issue.
“I note that during the hearing, ESL was asked certain specific queries/information in that regard along with relevant documents to substantiate the same... I find there is prima-facie evidence, by adverse inference, of misuse of funds by ESL,” said Madhabi Puri Buch, whole-time member at Sebi.
Sebi’s move came after it received the list of 331 suspected shell companies from the government on June 9 and was asked to initiate necessary action.