Until about two decades ago, India had around two dozen regional bourses, which were trading in paper shares. With the advent of computerised national bourses such as the National Stock Exchange and the BSE, these regional bourses have lost their market share and relevance. While the regulator has put out a detailed framework for shutting these down, investor bodies such as Midas are objecting to it on the grounds that small investors are not being given proper exit options.
The petition has challenged circulars issued by Securities and Exchange Board of India (Sebi) in 2012 and 2014 for de-recognition of regional stock exchanges (RSEs) and de-listing of companies listed exclusively on these RSEs, terming the circulars ‘anti-investor’ and ‘illegal’.
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Source: Midas petition |
The petition stated that 10 million small shareholders in 5,152 companies listed exclusively on RSEs, out of 11,000 listed companies in the country, are likely to be duped of Rs 1.5 lakh crore, if corrective steps are not taken.
“This is virtually 50 per cent of the securities market. Sebi has talked about provision to migrate to the BSE or NSE, but we are not aware of any company that have offered this facility to investors. If at all there were such companies, these would be negligible,” Virendra Jain of Midas Touch told Business Standard.
Jain said even companies, which are doing well and have strong balance sheet and good cash flows are seeing this as an opportunity to not pay investor anything. “Some investors of such companies had approached us. They are very worried,” said Jain.
He added many investors are fed up and have written off their investments and vowed to never return to stock markets. “That is why investor population is going down. What Sebi is doing is wiping its slate clean as if millions of investors in these bourses never existed,” said the veteran of many fights for investors.
According to the revised criteria in 2012, Sebi laid down a minimum Rs 1,000 crore annual trading for recognition or renewal of recognition of a stock exchange and failure to achieve the same by May 2014 would lead to de-recognition of such stock exchange.
The petition stated that Sebi has de-recognised nine stock exchanges (Hyderabad, Coimbatore, Saurashtra, Mangalore, Inter-connected, Cochin, Bangalore, Ludhiana and Delhi) till January 2015. About 2,000 companies were exclusively listed on them till January 6, 2015. However, no steps have been taken by Sebi to protect the interests of shareholders of these companies. Further, 11 more stock exchanges are in the process of exit or de-recognition.
Earlier, Midas Touch had written to Sebi to take action to protect the interest of investors, but the latter did not respond.