In just over a fortnight, SEBI has reversed orders passed against 421 companies.
On Tuesday, the market regulator revoked the trading ban imposed on 114 entities that had come under the scanner for alleged manipulation and misuse of stock markets for tax evasion.
“Violation of provisions of the SEBI Act, Securities Contracts regulation, Prohibition of Fraudulent Trade (PFTUP) norms were not observed in respect of these 114 entities,” SEBI said.
Simply put, SEBI did not find any price manipulation or violation of the securities market law. In May 2015, SEBI had restrained these 114 entities from stock markets for ₹420-crore tax evasion.
Similarly, on September 6, SEBI lifted the ban on 307 entities that were probed for alleged tax evasion. The final order said no securities law violation was found.
The modus operandi of many entities is to get a preferential allotment, hold the shares for over a year, and sell them at a higher price. This generates long-term capital gains, which are tax exempt. Merely earning LTCG is not an offence, but could be a violation of the securities law if a conspiracy is involved.
“It is positive that SEBI is willing to accept its wrong and even correct it,” said Sandeep Parekh, founder Finsec Law Advisors.
SEBI has also lifted its ban on a dozen of the 331 shell companies it had recently stopped from trading their shares on the stock exchanges. A SEBI official told BusinessLine that its senior members were working overtime to study the shell company issue.