Mumbai: To check manipulation in trading of securities, BSE has beefed up its surveillance on preferential issue of shares and would adopt measures such as reduction in price band and suspension of securities.
There has been substantial increase in manipulation and abrupt movement in the prices of securities which is mainly done through the route of preferential allotment, the exchange said in a circular.
To check any possible manipulation, BSE said that trading in securities of companies shall be suspended and the price band shall be reduced if they do not furnish certain information on preferential allotment, including amount raised under each preferential issue in the past, and the object of raising such funds.
"While the exchange, from time to time, has taken requisite steps to detect and contain such instances, it is felt necessary that further pre-emptive measures should be adopted to curtail misuse of the exchange's system," the circular, dated December 18, said.
The exchange said that listed companies on its platform should submit an auditor certificate mentioning how the preferential issues in the past benefited the company, the amount of money raised under each such issue and the objective behind it.
It also asked for bank statement of the company supporting that there was no mis-utilization of funds raised under preferential basis.
BSE also asked for auditor certificate and necessary documents supporting that the fund raised through preferential route "has not been transferred back to the preferential allottees/ promoters/ directors directly or indirectly".
It further said that trading in the securities of such companies shall be suspended till they submits these information.
The exchange also said that in case of any discrepancies observed in the auditor certificate, it shall be viewed seriously including referring the case to ICAI.
Meanwhile, in a separate circular issued today, BSE suspended trading in the securities of 35 companies with effect from December 24 for non-compliance of these directions.
The firms suspended include Green Field Agri Ventures, Hindusthan Safety Glass Industries, Dwitiya Trading, Goenka Business & Finance, Kausambi Vanijya and Modi Udyog.
