1. Sebi to crackdown on non-compliant companies on defunct bourses

Sebi to crackdown on non-compliant companies on defunct bourses

To safeguard investors of firms listed on non-operational bourses, Sebi today decided to initiate action against companies that failed to submit an action plan to list on bourses or to provide exit option to shareholders.

By: | New Delhi | Published: July 7, 2017 8:46 PM
Sebi, Sebi crackdown, Sebi latest news, Sebi latest crackdown, Sebi crackdown on non-compliant cos on defunct bourses, Exclusively listed companies Exclusively listed companies (ELCs) on the dissemination board were required to submit their action plans to either list on nation-wide bourses or provide exit option to shareholders by June 30, 2017. (Reuters)

To safeguard investors of firms listed on non-operational bourses, Sebi today decided to initiate action against companies that failed to submit an action plan to list on bourses or to provide exit option to shareholders. Exclusively listed companies (ELCs) on the dissemination board were required to submit their action plans to either list on nation-wide bourses or provide exit option to shareholders by June 30, 2017. The regulator had, in October 2016, provided three months time to ELCs to submit an action plan to list on bourses or to provide exit option to shareholder. In January this year, it had asked such companies to submit the action plan till March. ELCs are entities listed on non-operational exchanges and are currently on dissemination board of functional bourses where they are not traded. Now, Sebi has decided to initiate action against the non -compliant ‘ELCs on Dissemination Board (DB)’, and its directors/promoters, the regulator said in a statement.

As on June 30, as many as 2,000 ELCs were on the dissemination board. Of these, 376 submitted the plan of action. Besides, a total of 189 ELCs obtained listing on the main board exchanges and another 64 exited. The regulator said that there are 536 ELCs which are traceable and but did not submit plan of action. “Out of 536 ELCs, there are few ELCs which have made representation to Sebi/stock exchanges and their representations are under examination. Sebi has extended the time to submit plan of action by such ELCs till September 30, 2017,” Securities and Exchange Board of India (Sebi) said.

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It would now initiate action against the non-compliant companies and its directors/promoters. On 1,088 companies that are not traceable, Sebi said that a process has been initiated for their inclusion in the list of companies identified as ‘Vanishing’ (maintained by Ministry of Corporate Affairs). Once a company is declared as vanishing, Sebi debars the directors and promoters of such companies from accessing the capital market, in addition to actions that may be taken by Registrar of Companies, Ministry of Corporate Affairs, including prosecution against promoters and directors of such firms, the regulator added.

Sebi, in October 2016, had announced that action would be taken against ELCs that would continue to be on the dissemination board. In these cases,the regulator may take various measures such as it can bar non-compliant companies and its directors from the securities market, freezing of shares of the promoters or directors and it can attach of bank accounts/other assets of promoters/directors so as to compensate the investors.

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