New rule to prevent rash of fake IT companies


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August 17, 1999

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New rule to prevent rash of fake IT companies

With a view to safeguard investors' interest, the government will allow the change of name of companies to reflect software only if a substantial portion of the company's income is derived from computer software and is shown so in certified accounts.

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The registrar of companies would check the misuse of name, an official release in New Delhi said. Many companies have changed their names to suggest that their business interests are related to computer software.

Since information technology companies command hefty premium in the stock market, many companies included words like Infosys, software, Systems, Info-Systems, Computers, Cyber, Cyberspare in their names to dupe gullible investors.

National Association of Software and Service Companies President Dewang Mehta welcomed the move, saying the decision would protect investors' and help genuine IT companies maintain reputation.

Many initial public offerings of software companies are oversubscribed many times, tempting dubious companies to take advantage of the situation.

UNI

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