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Money > Business Headlines > Report August 29, 2002 | 1213 IST |
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Corporate ads now under Sebi scrutinyRakesh Sharma & Janaki Krishnan in Mumbai For ETP Corporation Ltd (formerly known as Esquire Tea Plantation & Industries Ltd) money literally can grow on trees. But the Securities and Exchange Board of India is not buying this argument. The ETP Corp advertisement, announcing 1:1 bonus issue of shares, is under the glare of the capital market watchdog. This is not the only instance. Buyback, bonus shares and dividend declarations advertisments and other notices of 'corporate actions' of penny stocks are being investigated by Sebi. The market watchdog is seeking details of corporate announcements made by small companies in leading finance dailies. The objective is to ascertain the genuineness of these announcements. In letters issued to various newspapers, the markets regulator has asked for the details about the advertisements placed by 11 companies. It has sought details of the names and addresses of the advertising agency through which the ads were placed, the names and addresses of the advertiser (that is, the company) and copy of the advertisement release order. The companies with regard to which the details are sought include E Star Infotech, SMR Universal Softech, Top Media Entertainment, ETP Corporation, Manna Glass Tech Industries, Genus Commu-trade, MOH Ltd, Continental Controls, Universal Media Network and Megan Industries. These advertisements appeared between June 26 and July 12 this year. The announcements made by these ads range from issue of bonus shares to declaration of dividend, allotment of shares to foreign financial institutions and plsn to buy back shares. Incidentally, Sebi rules permit buy-back only up to10 per cent of the company's equity in a year without shareholders approval. Many of the companies which have issued the ads, have mooted proposals to buy back up to 20 per cent of the equity. In July this year Sebi had called for a probe in price increases of 'penny' stocks. At that time Sebi had said that market operators connive with the management of companies whose shares are illiquid and trading below par. They issue advertisements in newspapers proclaiming false results, including declaration of dividend and naming some fictitious foreign firm that is apparently eager to enter into a collaboration with the company. According to Sebi, "Such advertisements are issued to create interest in the counter and lure investors to take a position." Sebi now wants to find out whether the advertisements are genuine. The papers have been asked to furnish the information to Sebi latest by August 30, 2002. ALSO READ:
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