Compliant companies on regional exchanges will be given an opportunity to move to the national bourses as part of the road map laid down by the capital markets regulator for the exit of regional stock exchanges (RSEs) in the event they are unable to garner requisite turnovers going forward. Moreover, the brokers trading on these regional exchanges too will migrate to the larger national bourses, making it a smooth affair.
An internal analysis by the Securities and Exchange Board of India (Sebi) has shown that only a handful of such listed entities have a significant public holding. According to a person familiar with the developments, a Sebi study has found that there are just about 70 companies, listed on various RSEs, that are fully compliant in terms of reporting profits as also with the listing agreements. Further, two-thirds of nearly 2,000 non-compliant companies are closely-held with very small public shareholding.
?The number of compliant companies are only 72, which Sebi will move to national exchanges like BSE and NSE,? said a person privy to the developments. ?The compliant companies will be included in the trade for trade segment and waivers in listing fees would be provided. And as the bulk of the non-compliant companies have a high promoter holding, the bulletin board mechanism can be used to deal with them,? he explained.
This would come as a huge relief to both ? the compliant companies and the public shareholders of such entities ? who found trading difficult due to issues related to low liquidity and the limited reach of the regional bourses.
Meanwhile, in its board meeting held early this month, Sebi finally took a decision on the long-pending issue of providing an exit for non-operational stock exchanges and the companies listed on them. Currently, there are 17 regional stock exchanges in the country that have negligible or nil trading.
The capital market watchdog has said that any exchange with an annual turnover of less than R1,000 crore or without any trading on its own platform can apply for voluntary derecognition and exit.
Further, Sebi will compulsory derecognise any stock exchange that is not able to achieve R1,000 crore turnover on continuos basis if it does not apply for voluntary de-recognition within two years from the date of notification.
The regulator, keeping in mind the interest of the brokers registered with RSEs has said that all such entities would be eligible for membership and trading through national exchanges like BSE and NSE. According to Sebi estimates, there are currently around 1,800 such broker entities.
For the exit option for shareholders of exclusively listed companies, a mechanism of dissemination board at stock exchange has been decided on the lines of bulletin board.
The exit of stock exchanges, however, will be subject to certain conditions including, payment of any statutory dues to the state and Sebi, contribution of certain percentage of assets of the exchange towards Investor Protection and Education Fund, etc.