More power to SEBI to monitor end use of IPO money
Market regulator Securities and Exchange Board of India (Sebi) could soon get more teeth to monitor the end-use of money raised through initial public offerings by companies. The ministry of corporate affairs (MCA), which currently performs this role through the registrar of companies, wants Sebi to be roped in for this task, since companies divert funds through complex mechanisms that require expert hands to track.
Sources said a proposal to this effect was mooted last Monday at a meeting convened by MCA secretary R Bandyopadhyay and attended by officials of Sebi and RBI, as members of the coordination and monitoring committee on vanishing companies.
“We (MCA) feel that Sebi also should monitor if firms raising money through IPO are diverting it for purposes other than the company’s stated business plans,” a ministry official said.
Sources said since a company at the time of listing has to strictly adhere to rules laid down by Sebi, it is in the best position to ally with the MCA in tracking the end use of IPO money.