Sebi nixes DSE plan to offload 51% stake

Mumbai, Nov 13 | Updated: Nov 14 2005, 05:30am hrs
The Securities and Exchange Board of India (Sebi) has asked the Delhi Stock Exchange (DSE) to desist from selling 51% stake to strategic investors on the grounds that it was against the laid down rules and regulations. DSE has convened an extraordinary general meeting on Nov 14 to discuss the demutualisation plan of the stock exchange.

Regulators move would put to rest the plan, if any, of other regional stock exchanges from adopting the strategic disinvestment route for demutualisation.

Sebi has reiterated to the DSE board that the current guidelines allow stock exchanges to divest 51% only through a fresh issue of shares through a public offer.

The finance ministry had also taken note of recent media reports that Anil Ambani was eyeing the strategic stake in the countrys premier bourse, the Bombay Stock Exchange (BSE).

BSE has subsequently clarified through newspaper advertisement that it was not contemplating any such move. Following a clearance of its corporatisation and demutualisation plan in August this year by Sebi, DSE convened an EGM of its members to authorise the board to sell 51% stake of the existing shareholders to some merchant bankers and investors who have shown interest in the divestment programme. A notice to this effect was also sent to Sebi.

When contacted, the DSE president confirmed that the board had received a communication from the regulator, he, however, declined to give other details. Sebi said, the proposed regulation was in violation of the provisions of the Security Contract Regulation Act and the corporatisation and demutualisation scheme approved for the exchange.

If you fail to abide by this directive Sebi shall initiate suitable action against the concerned entity, the regulator warned in a letter dated Nov 4 to DSE board.