Concealment of information

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A company has failed to disclose a significant loan default and subsequent Sarfaesi Act notices in its financial results submitted to stock exchanges. This omission means the financial statements do not present a true and fair view, potentially misleading stakeholders. Shareholders who bring this to light may trigger actions against the company, including delisting, and could question the directors' conduct.

Naresh Bhardwaj

Naresh Bhardwaj (Querist)
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29 August 2020 ABC Ltd. took loan worth Rs. 50 crores from bank against mortgage of property worth Rs. 100 crore. Company failed to repay the loan and interest. Bank issued notice under Sarfaesi Act and fixed a date. Company did not adhere to it. Bank has again issued a notice under the above Act and fixed a date which is yet to come. Company while sending annual results ended March and quaterly results ended June to the stock exchanges did not include above information in the results nor auditors were informed about above notices so they did not mention it in their report.

If a shareholder brings the above information to the knowledge of stock exchanges what action they can take against the company.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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30 August 2020 Financial Statements should reflect true and fair view of the business affairs. All forms of business risks and contingency needs to be disclosed as a note to have a transparency to all stakeholders like, suppliers, lenders, Banks, Govt, shareholders. Business will be facing negative sentiments if these are not followed. Listing in the Stock Exchange can be dropped.

Naresh Bhardwaj

Naresh Bhardwaj (Querist)
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31 August 2020 Thanks a lot. Can stock exchanges order registration of FIR against the directors for hiding information regarding receipt of notice under Sarfaesi Act or under which circumstances directors can be sent behind bars. Please reply.

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