These three companies have failed to sign up with the depository on time to enable their scrips to be included in the list of 25 securities where institutions had been asked to trade only in demat shares from April 5.

As a result, Sebi has issued a directive taking these three companies off the list of 25. These would be included once they complete the formalities by signing-up.

However, Vesuvius India has now signed up, but LML and Carrier Aircon, two fairly well-traded stocks, are yet to do so. Depository officials were not able to provide any certain date by when the two companies would sign up.

This is not the first time that companies have failed to comply with the Sebi deadline of allowing their shares to be traded in a dematerialised form.

On every occasion, Sebi had tostep in and direct the companies to sign up at the earliest. ``But the issue is not of Sebi taking action but a desire on the part of a company to provide its investors with the option of trading in demat shares. The Depositories Act clearly provides the option to an investor to hold shares in a physical or demat form. By not signing up, companies are, in fact, depriving a shareholder from his right to exercise an option to hold shares in demat form,'' said a Sebi source.

``More than 300 companies have signed up with the depository. Over 700 crore shares worth Rs 1.15 lakh crore have been dematerialised by 4,70,000 investors. It's surprising that companies are still not signing up,'' said the source.

Sebi had made it mandatory on institutions to trade in demat shares of select scrips from last year onwards. Over a period of time, the list of such scrips has gone up to 325. In the meantime, Sebi has also come out with a list of 64 stocks where all classes of investors would have to trade only in dematshares. This list will go up to 104 by May 31 covering a major part of the Indian securities market.