The SEBI move follows the decision of the Registrar of Companies (RoC) not to allow companies to change their names to reflect the business of software until a substantial income is derived from software. The RoC took this decision after a large number of finance companies changed their names to reflect association with the software sector and misleading investors. RoC had said a company can change its name only if a substantial portion of their income from software business is reflected in audited accounts or accounts certified by a chartered accountant.

In fact, when the Varma panel on the primary market proposed these changes to the SEBI board two weeks ago, three members -- representatives of the investors, Finance Ministry and a professor -- had put a dissentnote. ``There is a fear that SEBI is opening a Pandora's box. Genuine companies will raise funds whether it's 25 per cent or 10 per cent. Chances of rigging the prices of companies with only 10 per cent of the equity listed on the exchanges are more,'' said an expert.

According to merchant bankers, around 60 software issues are slated to hit the capital market in the current year. As many as eight software issues had already hit the market so far. ``With the share prices of blue chips like Infosys, NIIT, Wipro, Satyam and Pentafour ruling at very high levels, investors are also attracted to software issues. Many new issues which are being planned are floated by fly-by-night operators. One can soon witness a software issue scam like the public issue scam in the 1994-96 period,'' said a merchant banker.

Analysts also feel that such measures will not revive the primary market and lead to higher capital formation. SEBI should ask software companies to disclose more details about their operations, especiallyfrom software, they said.