Shell cos matter: Sebi confirms forensic audit of Hit Kit Global

Markets regulator Sebi has confirmed the forensic audit of Hit Kit Global Solutions that it had ordered last year.

Through an interim order passed on September 7, 2017, the Securities and Exchange Board of India (Sebi) had ordered a forensic audit of Hit Kit Global Solutions Ltd (HKGSL), which figured among 331 suspected shell companies under the regulatory scanner.

In its interim order, Sebi had said that even though there was no prima facie evidence of misrepresentation or misuse of books of accounts or funds by the company, it was imperative that in the interest of investors, the financials of the company be independently audited to establish their genuineness.

In a confirmatory order dated May 21, the regulator said HKGSL failed to fully clarify all the details regarding utilisation of the amounts appearing in its financials.

"... I find that the facts and circumstances of the case as brought out in the interim order, have not changed adequately, so as to justify the dis-continuation/ modification/ revocation of the directions passed in the interim order," Sebi Whole Time Member Madhabi Puri Buch said.

I confirm the directions issued against HKGSL through the interim order dated September 7, 2017, the Whole Time Member added.

HKGSL is among the firms against whom Sebi had initiated action on August 7, 2017, by ordering trading restrictions after it received the list of 331 'suspected shell companies' from the government.

The trading restrictions -- allowing trade only once a month and that too for only buy transactions with a 200 per cent security deposit -- were revoked in some cases a few days later, following appeals filed by the companies with the Securities Appellate Tribunal, but Sebi was asked to continue with its probe and pass its orders expeditiously.