Thirty-nine entities, barred from stock markets by Sebi last week for circular trading, may also face inspection by the Ministry of Corporate Affairs (MCA) for possible anomalies in their balance sheets.
“We are considering to inspect the books of these companies under section 234 of the Companies Act 1956, as we thought they caused huge losses to investors,” a senior MCA official told PTI.
In the first stage, the probe into the allegations of circular trading may be done by the Director of Inspection and Investigation in the MCA.
If there is a prima facie case, it would then be referred to the Registrar of Companies (RoC) which can launch scrutiny under Section 234 of the Companies Act that gives it powers to call for information or explanation from corporate firm.
