MCA probing 22 listed companies for misusing funds raised via IPOs
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The Ministry of Corporate Affairs (MCA) is probing 22 listed companies for suspected misuse of funds raised through initial public offerings. In addition, the MCA is also reviewing its mechanism for monitoring initial public offerings. The firms under the MCA scanner are mainly those which have defaulted on bank loans, and whose share prices have fallen sharply.
These companies are alleged to have used the money for purposes that were not mentioned in their draft red herring prospectus. A source told Moneycontrol, “The Ministry of Corporate Affairs found signs of misuse of funds when they did an initial investigation. We received a number of complaints against companies that diverted funds to other businesses or put it to personal use.
The MCA has instructed regional directors to scrutinise the books of these companies – each of which went public between 2010 and 2017. The Registrar of Companies (RoC) Mumbai has sent a detailed set of questions to these companies seeking clarification.
It was further alleged that some companies were pulled up for not making proper disclosures to the stock exchanges. The companies include those in gems and jewellery, textile, power and infrastructure companies.
The Securities and Exchange Board of India (SEBI) has an IPO monitoring mechanism in place for companies that issue shares above Rs 100 crore. As of now, the regulatory body has not initiated any action against these companies over alleged misuse of the capital raised.
“We will share investigation with the Securities and Exchanges Board of India after our investigation,” an MCA source said. #casansaar (Source - MoneyControl)
These companies are alleged to have used the money for purposes that were not mentioned in their draft red herring prospectus. A source told Moneycontrol, “The Ministry of Corporate Affairs found signs of misuse of funds when they did an initial investigation. We received a number of complaints against companies that diverted funds to other businesses or put it to personal use.
The MCA has instructed regional directors to scrutinise the books of these companies – each of which went public between 2010 and 2017. The Registrar of Companies (RoC) Mumbai has sent a detailed set of questions to these companies seeking clarification.
It was further alleged that some companies were pulled up for not making proper disclosures to the stock exchanges. The companies include those in gems and jewellery, textile, power and infrastructure companies.
The Securities and Exchange Board of India (SEBI) has an IPO monitoring mechanism in place for companies that issue shares above Rs 100 crore. As of now, the regulatory body has not initiated any action against these companies over alleged misuse of the capital raised.
“We will share investigation with the Securities and Exchanges Board of India after our investigation,” an MCA source said. #casansaar (Source - MoneyControl)
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