<p>The market regulator Securities and Exchange Board of India (SEBI) has decided to share with the Ministry of Corporate Affairs (MCA) names of 500 companies who have garnered money from investors in violation of its Collective Investment Scheme (CIS) Rules. <br /><br /></p>.<p>It would also give the names of directors of those entities to the MCA for taking necessary actions to prevent these companies and persons from being associated with any new company, said an SEBI official here. CIS, which comes under the ambit of SEBI, where an entity pools in money from investors for certain pre-specified purposes and later distributes the profits or income. <br /><br />As per SEBI estimate, more than 500 entities in the country had undertaken CIS activities without complying with the Sebi regulations and the regulator has initiated necessary action against many of them in the past. Most of these companies, their operators and directors tend to restart similar business under a new name and in the process many investors are taken for a ride before they come under the Sebi scanner.<br /><br />As a corrective measure, Sebi has now decided to request the MCA to circulate the names of defaulter CIS entities and their directors among all the ROCs (Registrars of Companies) in the country to prevent them from being associated with any new company, the official pointed out. A complete overhaul of the current CIS regulations is needed, as loopholes in the existing rules allow for the gullible investors being taken for a ride, he added. <br /><br />As per Sebi data, 664 CIS entities had raised Rs 3,518 crore in 1998-99 and out of these 664 CIS entities, 54 CIS entities wound up their schemes and refunded investors’ money. SEBI had issued directions to the remaining 610 entities directing them to refund the money collected under the schemes with returns due to investors as per the terms of the offer within a one month from the date of the Order. <br /><br /></p>
<p>The market regulator Securities and Exchange Board of India (SEBI) has decided to share with the Ministry of Corporate Affairs (MCA) names of 500 companies who have garnered money from investors in violation of its Collective Investment Scheme (CIS) Rules. <br /><br /></p>.<p>It would also give the names of directors of those entities to the MCA for taking necessary actions to prevent these companies and persons from being associated with any new company, said an SEBI official here. CIS, which comes under the ambit of SEBI, where an entity pools in money from investors for certain pre-specified purposes and later distributes the profits or income. <br /><br />As per SEBI estimate, more than 500 entities in the country had undertaken CIS activities without complying with the Sebi regulations and the regulator has initiated necessary action against many of them in the past. Most of these companies, their operators and directors tend to restart similar business under a new name and in the process many investors are taken for a ride before they come under the Sebi scanner.<br /><br />As a corrective measure, Sebi has now decided to request the MCA to circulate the names of defaulter CIS entities and their directors among all the ROCs (Registrars of Companies) in the country to prevent them from being associated with any new company, the official pointed out. A complete overhaul of the current CIS regulations is needed, as loopholes in the existing rules allow for the gullible investors being taken for a ride, he added. <br /><br />As per Sebi data, 664 CIS entities had raised Rs 3,518 crore in 1998-99 and out of these 664 CIS entities, 54 CIS entities wound up their schemes and refunded investors’ money. SEBI had issued directions to the remaining 610 entities directing them to refund the money collected under the schemes with returns due to investors as per the terms of the offer within a one month from the date of the Order. <br /><br /></p>
