The Securities and Exchange Board of India (Sebi) has decided to initiate action against non-compliant “exclusively listed companies (ELCs) on Dissemination Board (DB),” and its directors and promoters. These companies were earlier listed on non-operational or derecognised stock exchanges and were required to be placed on DB. The ELCs were required to comply with the directions issued by Sebi through a circular on October 2016. In the circular, Sebi had provided three months to the companies on DB to submit a plan of action to the designated stock exchanges (DSEs) either to list or to provide an exit to its shareholders. Further, Sebi had said that failure to comply with its directions will lead to company, its promoters and the companies which are promoted by any of them, shall not associate with the securities market or seek listing for any equity shares for a period of ten years from exit from the DB, freezing of shares of the promoters, and attachment of properties and assets of promoters to compensate the investors among other things. The time to submit the plan of action was subsequently extended till June 30, 2017. Sebi said as of June 30, there were 2,000 companies on the DB out of which 376 have submitted the plan of action, 1,088 were not traceable and 536 have not submitted any plan of action.
Sebi said out of 536 companies, a few have made representation to Sebi or stock exchanges and their representations are under examination. Sebi has extended the time to submit a plan of action by such ELCs until September 30, 2017. The market regulator said it will take action against the other non-compliant companies and its promoters.
Regarding the 1,088 untraceable companies, Sebi said a process has been initiated for their inclusion in the list of companies identified as ‘vanishing’ maintained by the 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 the registrar of companies, ministry of corporate affairs, including prosecution against promoters and directors of such companies.