Securities Law/Updates (Country: India)
SEBI, through its press release no. 41/2017 dated Jul 07, 2017, has informed that it has decided to initiate action against the non-compliant “Exclusively Listed Companies (ELCs) on Dissemination Board (DB)", and its directors/promoters. These companies were earlier listed on non-operational/ derecognised stock exchanges and were required to be placed on DB. The ELCs were required to comply with the directions issued by SEBI vide circular dated October 10, 2016.
SEBI vide circular dated October 10, 2016 provided three months to ELCs on DB to submit a plan of action to the designated stock exchanges (“DSEs”) either to list or to provide exit to its shareholders. Further it was also stipulated that failure to comply with the above would attract actions as enumerated below:
- Freezing of shares of the promoters/directors.
- List of the directors, promoters etc. of all non-compliant companies as available from the details of the company with nationwide stock exchanges shall be disseminated on SEBI website and shall also be shared with other agencies.
The time to submit the plan of action was subsequently extended till June 30, 2017.
The status of ELCs as on June 30, 2017 is as follows:
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. In line with its circular, SEBI shall now initiate action against the non-compliant companies and its directors/promoters.
With respect to the 1088 companies, which are not traceable, a process has been initiated for their inclusion in the list of companies identified as 'Vanishing' (maintained by Ministry of Corporate Affairs). Once a company is declared as vanishing, SEBI debars the directors and promoters of such companies from accessing the capital market, in addition to actions that may be taken by Registrar of Companies, Ministry of Corporate Affairs, including prosecution against promoters and directors of such companies.
This is issued in the interest of investors in the securities market.