Ministry of Corporate Affairs advises caution to IPO investors
24 December 2007
New Delhi: The government has cautioned small investors against misleading advertisements of companies looking to tap the capital market.
Advising retail investors to adequately verify credentials of companies before making an investment, The Ministry of Corporate Affairs has offered to help investors check the promoters' track record and regulatory compliances, among others assistance it is willing to provide.
Coming in the form of a public interest advertisement in leading newspapers, the advisory assumes significance when viewed in the light of an inventory of over 50 IPOs awaiting regulatory clearances.
The advisory issued by the Corporate Affairs Ministry echos alerts issued earlier by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Both bourses had categorically advised investors not to ''get swayed by promises of high returns'', and advised them to verify the tall claims made advertisements.
Information needed to make an informed decision for IPO investments is available on the ministry's website, along with other investor-focused government websites.
Information hosted by the ministry includes master data of companies, details on directors, documents such as annual reports and balance sheets, as well as a negative list of those who had duped investors previously. The website address is www.mca.gov.in
The advisory clarifies that for investors to get an overview of the company, they need to compare the company's financial results and performance over the last 3-5 year period.