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BSE tightens entry norms for new infotech companies
S Muralidhar
Mumbai, Oct 15: Close on the heels of Sebi's attempt to keep out fly-by-night operators from the capital market, the Bombay Stock Exchange has imposed entry barriers for such companies in the technology sector.At its governing board meeting the BSE has revised the criteria for listing on the exchange. To be eligible to be listed on the exchange companies in the knowledge-based business have to fulfill the following criteria: The total income/sales from the main activity, which should be in the field of information technology, internet, e-commerce and telecommunication, should not be less than 90 per cent of the total income during the three immediately preceding years. The minimum post-issue paid up equity capital should be Rs 5 crore The miniimum market capitalisation should be Rs 50 crore. The market capitalisation will be calculated based on the post-issue subscribed capital with the issue price.Over the last one year a large number of finance companies (over 25) have changed their names with a software tag with the intention of tapping the public at a high premium. Recently, Sebi tightened the norm for such companies by insisting that they should have distributable profit for three out of five years from the activity suggested by their name. BSE, however, has made it mandatory that 90 per cent of the total revenue should come from the IT/software business. This is applicable in respect of new companies. However, most of the companies that have changed their names are already listed on the exchange and their share prices have zoomed to unimaginable levels. Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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