On reading about the appointment of a liquidator in the Pyramid Saimira case, one of its 35,000 shareholders posed the following queries on which we have an opinion but no answers. First, when a court orders the winding-up of a company (Pyramid Saimira), should trading in the stock continue? The facts are that, over the two years when various SEBI orders have crippled the company’s business and even after the Madras High Court ordered it to be wound up, PSTL continues to be listed. Its stock price has sunk to just over Rs8 on 28th October at the time of going to press.
That SEBI has not addressed this issue for nearly two years after the first action against PSTL suggests that it either doesn’t care or thinks that smart investors ought to have voted with their feet and exited the company already.
The investor’s second question is: Should SEBI wait for the Supreme Court to dispose of the case before initiating any action to protect investors who have been misled by a series of announcements made by unscrupulous corporate managements? The Supreme Court may reverse SEBI orders. We believe that this is an issue that must be debated and addressed by SEBI’s primary and secondary market advisory committees. It applies to companies such as Satyam, PSTL, Prithvi Information Solutions and many others. Regulatory action that cripples a company and causes losses to investors, who are also otherwise the victims of mismanagement, is not an answer. SEBI and maybe the ministry of corporate affairs have to act to protect the financial interest of the company, its investors and lenders.
Tailpiece: There is a raging debate among India’s information technology experts on the pros and cons of the Nandan Nilekani-led Unique Identification (UID) project. On the one hand are those who see it as an expensive and serious violation of individual privacy and a government programme that can be seriously misused to target people. On the other hand there are those who buy into the propaganda that identification will reach economic benefits to India’s poorest people. In order to make it attractive, the government is leaking a list of benefits that will be available on production of a UID. A report that midday meals would also require a UID provoked a pro-privacy activist to quip—won’t it be far cheaper to tattoo a UID number on every newborn baby in India? — Sucheta Dalal
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