Listing criteria is the minimum threshold that companies should follow in terms of financial record and trading volumes to be listed on the bourses. At its upcoming board meeting on September 18, SEBI is anticipated to now raise this margin to prevent shell companies, which serve as vehicles for business transactions without having any significant assets or operations, from getting listed.
The Centre has asked all financial market regulators and investigative agencies to keep an eye on shell companies as it is believed that huge amounts of black money were converted using a web of such companies during the demonetisation drive.
On September 5, Finance Ministry Arun Jaitley cracked down on the banking operations of shell companies, the bank accounts of 2,09,032 suspected shell companies were frozen by the government on same day. The Ministry has advised all banks that they should take immediate steps to put restrictions on bank accounts of these companies and cautioned banks in dealing with companies.
It is expected that the capital market regulator may consider for tightening norms after it suspended trading in 331 entities based on the suspicion that they were shell companies. SEBI had earlier drawn hassle for the overnight suspension of trading in 331 suspected shell companies as it hurt shareholders whereas promoters were the real wrongdoers for malpractices.