A total of 238 companies which had raised funds through Public issues were initially identified as ‘vanishing companies’ as they had stopped filing documents/ balance sheets with the regulators and were untraceable. Out of these, 128 companies were removed from this category and placed under a ‘watch list’, as these companies had started filing their documents/ balance sheets, etc. In addition, 32 companies are presently under liquidation. Thus, as on date, there are 78 companies which remain in the list of ‘vanishing companies’.

The total amountof Public Issues made by these 78 companies was ₹ 310.21 crore (approx.). FIRs have been lodged against all these companies and their promoters/ Directors. Prosecutions have also been filed against such companies and their Directors under Sections 162 and 220 of the Companies Act, 1956 for non-filing of annual returns and balance sheets, respectively, and also under Sections 62/ 63, 68 and 628 of the Companies Act, 1956 for mis-statement in prospectus/ fraudulently inducing persons to invest money/ false statements made in the offer documents, etc.

The Ministry is in the process of developing an early warning system aimed at generating alerts for detecting cases of potential fraud and malfeasance. A pilot testing was carried out during the year 2013-14. The Ministry has also set up a forensic lab in its Serious Fraud Investigation Office (SFIO) for revamping its Market Research and Analysis Unit (MRAU) through induction of appropriate technology and skilled technical manpower.

The Ministry organizes investor awareness programmes regularly in association with the three professional institutes – Institute of Chartered Accountants of India (ICAI), Institute of Cost Accountants of India (ICAI) and Institute of Company Secretaries of India (ICSI) in various cities under the aegis of Investor Education and Protection Fund (IEPF). The programmes are held for creating awareness and empowerment amongst investors. Since 2012-13, MCA has also started organizing such programmes in rural areas through CSC e-Governance Services India Ltd., an entity under Department of Electronics and Information Technology. 2897 such programmes were conducted during the year 2013-14, under the IEPF.

This was stated by Smt. Nirmala Sitharaman, MoS in the Ministry of Finance in written reply to a question in the Lok Sabha today.

Non-filing and prospectus misstatement enforcement pursued, paired with early warning systems and forensic upgrades to deter corporate fraud. A cohort of companies that raised capital through public issues has been classified as vanishing companies where a subset remains untraceable and non-compliant with statutory filing obligations. Regulatory action includes lodging of criminal complaints and prosecutions against companies and their promoters/directors for non-filing of annual returns and balance sheets and for misleading disclosures in offer documents. The Ministry is developing an early warning system, establishing a forensic laboratory in the Serious Fraud Investigation Office, and conducting investor education programmes to detect, investigate and deter such corporate malfeasance.