In the backdrop of Sahara like cases hitting the headlines, the stock market regulator SEBI has asked government to chalk out a strong central legislation to take on companies garnering lump sum from the public without basic regulatory approvals and for doubtful investment projects.
“People make all sorts of excuses - in some cases they claim they are under the state government, some cases they are saying they are registered with the Ministry of Corporate Affairs, some cases they are saying they are housing companies and in some cases they claim to be NBFCs. And in most cases, they say that we are not under the Sebi jurisdiction,” said U K Sinha, SEBI Chairman. The existing legal provisions are faulty and easily permit such companies to gain from certain loopholes in the regulatory structure.
Sebi (Securities and Exchange Board of India) is entrusted with the responsibility to protect the interest of investors in securities market and also regulate and promote various investment products in the capital markets, including the public listed companies. Also, raising of funds from 50 or more public investors by any unlisted entity comes under Sebi’s jurisdiction - a regulatory position which recently came to light in the high-profile case involving Sahara group.
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