Shell cos matter: Sebi revokes trading restrictions against Kkalpana Industries

Markets regulator Sebi has revoked trading restrictions imposed against Kkalpana Industries (India) Ltd after not finding any "prima facie" evidence of misrepresentation of financials by the firm.

Kkalpana Industries is among the firms against whom Sebi initiated action in August 2017 by ordering trading restrictions, following receipt of a list of 331 "suspected shell companies" from the government.

Among others, the Securities and Exchange Board of India (Sebi) had placed the firm in the trade-to-trade category with limitation on the frequency of trade and imposed a limitation on the buyer by way of 200 per cent deposit on the trade value.

"... I do not find any prima facie evidence nor suspicion of misrepresentation of financials/ business of the company (Kkalpana Industries) nor of misuse of books of accounts/ funds of the company nor of violation of LODR (Listing Obligation and Disclosure Requirements) Regulations," Sebi whole time member Madhabi Puri Buch said in an order dated July 31.

In the absence of any prima facie evidence, Buch said there is no reasonable ground to further verify the financials of the company warranting an audit.

"In the facts and circumstances of the case, I... hereby, revoke the actions envisaged in Sebi's letter dated August 7, 2017 and the consequential actions taken by stock exchanges against Kkalpana Industries (India) Ltd," the whole time member said.

Sebi's move came after it received the list of 331 suspected shell companies from the government in June 2017 and was asked to initiate necessary action.

The regulator had found that the companies identified as shell companies were potentially involved in misrepresentation including their financials and business in violation of listing regulations.