Sebi Spells Out Safeguards

The Securities and Exchange Board of India (Sebi) has placed two safeguards for investment in Anubhav Plantations company. The regulator has issued a ``no investment grade'' rating for the company. It has further stated that if the company wishes to raise more funds, it will have to spell out the exact nature of the schemes and the end-use of funds.

While no action is being taken immediately, Sebi has appointed a committee that will finalise regulations on collective investment schemes at its meeting on November 7. The committee will also meet plantation industry members on the same day to get their view-point.

Sebi chairman D R Mehta said, "We have spelt out the steps which they should follow while raising money. Further, they will have to stick to the advertisement code set out for such schemes and the Delhi High Court order. As part of the safeguard, we had already given the rating in relation to such schemes.'The Division bench of Delhi High Court consisting of Anil Dev Singh and Mukul Mudgal passed an order in a public interest litigation to regulate the activities of plantation companies and collective investment schemes.

The bench directed all the 591 plantation companies to get a credit rating by a Sebi-recognised agency and give a complete list of assets and liabilitiesand directors with their personal assets along with the date of acquisition of these assets. The court further directed that any further mobilisation of funds must strictly comply with the Sebi directives issued from time to time and restrained the plantation companies from alienating their assets.

Sebi has been directed to issue a public advertisement giving a gist of this order. Till date all the 27 companies that have got a credit rating have been rated below investment grade.