SEBI to remove shell companies from bourses to protect investors

The Securities and Exchange Board of India (SEBI) is intensifying its campaign to remove inactive listed companies from stock exchanges, recognizing them as a significant threat to investor protection and market stability.

SEBI Chairman Tuhin Kanta Pandey said numerous listed companies continue to operate without any meaningful economic activity, creating vulnerabilities in the market structure. "These entities pose a potential danger to investors, and it is therefore necessary to remove them from the listed space," Pandey stated during a weekend programme. "We are making deliberate efforts towards their delisting."

The regulator has identified a pattern wherein such dormant stocks are exploited in "pump and dump operations" by market manipulators who use social media groups to target retail investors. Pandey emphasized that from a market integrity perspective, the continued listing of economically inactive companies exposes an expanding investor base to unnecessary risks.

To address the problem systematically, SEBI is deploying artificial intelligence and advanced monitoring techniques to track and scrutinize suspicious accounts and trading patterns associated with these shell companies. The enforcement approach combines technological surveillance with regulatory action to identify and eliminate entities that no longer serve legitimate market functions.