SEBI Acts Against Non-Compliant Companies On Defunct Bourses

Securities and Exchange Board of India (SEBI) on Tuesday ordered freezing of corporate benefits, including board membership, for promoters of companies listed on non-operational bourses that failed to give exit option to minority shareholders.

The promoters and directors of non-compliant companies have also been barred from dealing in the market till the time promoters provide an exit option to shareholders, SEBI said in a circular.

"Such ELCs and the depositories shall not effect transfer, by way of sale, pledge, etc, of any of the equity shares and the corporate benefits such as dividend, rights, bonus shares, split, etc shall be frozen, for all the equity shares, held by the promoters or directors of non-compliant ELCs," SEBI said.

Exclusively Listed Companies (ELCs) are those companies whose shares were listed on non-operational exchanges and are currently on dissemination board of functional bourses. Shares of such companies are available for buying and selling on dissemination board.

These companies were required to submit their action plans to either list on nation-wide bourses or provide exit option to shareholders by June 30, 2017.

The regulator had, in October 2016, provided three months time to ELCs to submit an action plan to list on bourses or to provide exit option to shareholder. In January this year, it had asked such companies to submit the action plan till March.

As on June 30, as many as 2,000 ELCs were on the dissemination board. Of these, 376 submitted the plan of action. Besides, a total of 189 ELCs obtained listing on the main board exchanges and another 64 exited, Sebi said last month.

The regulator said that there are 536 ELCs which are traceable and but did not submit plan of action.

"Out of 536 ELCs, there are few ELCs which have made representation to Sebi/stock exchanges and their representations are under examination. Sebi has extended the time to submit plan of action by such ELCs till September 30, 2017," the regulator had said.

On 1,088 companies that are not traceable, Sebi had said that a process has been initiated for their inclusion in the list of companies identified as 'vanishing' (maintained by Ministry of Corporate Affairs).