15 Mar 2010, 1958 hrs IST,
Source:ET/PTI
NEW DELHI: The government has asked market regulator
Sebi to devise ways of monitoring the end use of money
collected through initial public offering, in order to
keep a check on vanishing companies.
While the Ministry of Corporate Affairs (MCA), through
technical scrutiny of balance sheets, keeps a check if
companies are using IPO proceedings as promised in the
prospectus, the Ministry wants Sebi too to look at the aspect, sources said.
"More coordination is required between the MCA and
the Sebi to ensure that the correct information is
available regarding how companies use their IPO proceeds.
Lot of times companies do not regularly file quarterly
results with the registrar of companies, but they do inform
stock exchanges, so we have asked Sebi if they could also monitor
IPO proceeds," a senior MCA official said.
The proposal was mooted at a recent meeting of the Coordination
and Monitoring Committee (CMC) on vanishing companies, headed
by MCA Secretary R Bandyopadhay and represented by ministry officials,
the Securities and Exchanges Board of India (Sebi) and the Reserve Bank.
At present, sources said, MCA is the only authority that
can monitor the end use of IPO money.
In 2009, around 20 companies raised a total of Rs 20,000 crore
through initial public offerings. In 2010 so far, as many
as 16 companies have come out with public offerings, including IPOs and FPOs.
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