Sebi issues list of 51 companies for GDR manipulation

Regulator asked depositories to freeze beneficiary accounts till further order

The Securities and Exchange Board of India (Sebi), investigating issuance of Global Depository Receipts (GDRs) abroad by Indian companies, has directed depositories to freeze beneficiary accounts which have received the underlying shares on conversion or cancellation of the issues by 51 companies.

The move came after a Sebi probe on Dubai-based Arun Panchariya apparently revealed fraud, in connivance with the promoters and directors of issuer companies. There are, therefore, suspicions on the remaining 58 GDR issues.

“In case the underlying shares of the GDRs are sold by the global depository banks, the sale proceeds to be kept in an interest- bearing escrow account with the Indian custodian of the GDRs,” Sebi directed on Thursday.

Any individual or entities aggrieved by the dictat may apply to the regulator within 21 days. Sebi has listed the names of Indian issuer companies that had issued GDRs.

Currently, Sebi is probing 59 GDR issues (issued during the period 2002 to 2014) of 51 Indian companies. Aptech, Winsome Textile Industries and Zylog Systems are among these.

The Sebi note says Panchariya and related entities, including India Focus Cardinal Fund and Vintage, had dealt in the GDR issues of certain Indian companies. The entities had subscribed to the GDRs and the subscription money was availed of as a loan from bank, with the issuer company giving security for this, it said.