Markets regulator Sebi today ordered a forensic audit of Parsvnath Developers Ltd (PDL), which figured in the list of 331 "suspected shell companies", on prima facie suspicion of misrepresentation of business by the firm with regard to certain transactions.
In an interim order, the Securities and Exchange Board of India (Sebi) said, "the present enquiry is restricted only to contracts/ sub-contracts undertaken by PDL during the period 2009-10, 2010-11 and 2011-12".
The regulator directed the exchange to appoint an independent forensic auditor to verify any misrepresentation including of financials or business by PDL in the context of the transactions during the financial years 2009-10, 2010-11 and 2011-12, including the role of key managerial personnel, directors and promoters in them.
Also, the auditor has to verify any misuse of the books of accounts and funds including facilitation of accommodation entries or compromise of minority shareholder interest in the context of the transactions during the three financial years.
"Thus, I find that it would be appropriate that the financials of the company be independently audited to establish their genuineness of its transactions/ contracts and sub-contracts... including the role of KMPs, directors and promoters in those transactions," Buch added.
PDL is among the firms against which Sebi initiated action on August 7, 2017, by ordering trading restrictions, following receipt of a list of 331 "suspected shell companies" from the government.
The ordered trade 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, including that of PDL, a few days later following appeals filed by them with the Securities Appellate Tribunal, but Sebi was asked to continue with its probe and pass its orders expeditiously.
In the fresh ruling, the regulator said the other actions envisaged in Sebi's letter dated August 7, 2017 "as may be applicable and the consequential action taken by stock exchanges shall continue to have effect" against PDL.
Noting that the "prima facie observations contained in this order are made on the basis of the prima facie material available on record", Sebi said the firm may file its reply within 30 days of receiving it.
According to the ruling, if PDL fails to file a reply within 30 days, the preliminary findings of this order and the interim directions "shall stand confirmed automatically, without any further orders".
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