Stock market regulator Sebi has asked major domestic equity indices to initiate action against 331 listed firms which are suspected of being "shell companies".
The development comes a day after the market regulator directed the two major indices -- National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE) -- through a letter to initiate action against the suspected firms.
The Sebi letter forwarded a list of 331 suspected "shell companies" identified by the Ministry of Corporate Affairs.
According to the letter, trade in all the 331 listed securities shall be placed in "Stage VI of the Graded Surveillance Measure (GSM)" with immediate effect.
"If any listed company out of the said list is already identified under any stage of GSM, it shall also be moved to GSM stage VI directly," the letter said.
The stage VI of GSM framework mandates the exchange to allow trade in the identified securities only once a month under its trade-to-trade category.
The framework further mandates that any upward price movement in these securities shall not be permitted beyond the last traded price amongst additional surveillance measures.
The letter further read: "Exchanges shall initiate a process of verifying the credentials, fundamentals of such companies."
"Exchanges shall appoint an independent auditor to conduct audit of such listed companies and if necessary, even conduct forensic audit of these companies to verify its credentials, fundamentals."
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