A stitch in time saves nine and the government’s move to take on shell companies through SEBI notification is a move in the right direction. A list of over 300 companies would now only be traded on the stock exchanges on the 1st Monday of each month only with riders and that is in a way sending alert warning signals to investors to trade in such companies with caution.
Shell companies basically are to not just fool investors but banks and tax authorities as well. Loans are taken by these companies without the intention to repay and the move by the government to eradicate this form of corruption would cleanse the corporate frauds and make our stock exchanges stronger in the days to come. However, a mere notification and restricted trading would not suffice and these companies also need to be raided to go to the root of the problem so that money siphoned out of the system could be recovered.
(The views expressed by the author in the article are his/her own.)