Crowd thins at the last place to trade shares of RSE-listed companies

The herd is thinning at the last place you could buy and sell shares of companies that were previously listed only on regional stock exchanges (RSEs).

The latter began to shut down over the past few years. By now, firms transferred from there to the dissemination board of established exchanges have seen a number of exits. This board is a platform where one could buy or sell shares of companies, with less oversight than the main exchange trading platform.

Both NSE and BSE have announced removal of several companies from this platform. Some are Nine Media & Information Services and Combine Overseas, Sri Ramnarayan Mills, Mehta Caplease and Leasco.

“These companies shall not be available on the dissemination board of NSE with effect from July 23,” said the NSE notification. The BSE’s exit date was July 19.

At least 123 companies have been removed from the BSE’s dissemination board after they provided shareholders an exit option, shows data as of July 15. The total rises to 507 if one includes other reasons such as listing, mergers or having zero or negative valuation. NSE showed similar figures.

The Securities and Exchange Board of India (Sebi) had introduced guidelines a few years earlier which resulted in the exit of many regional bourses. Firms listed exclusively on the latter were to list themselves on nationwide stock exchanges. 

They could choose to delist after following necessary guidelines. They were moved to the dissemination board if they failed to do either, and given additional time for compliance.

Their promoters were required to provide an exit option to shareholders even after the move to the dissemination board, if they failed to subsequently list themselves. 

An independent valuer determines the fair value at which such an exit is to be provided. “The promoter shall certify to the satisfaction of the designated stock exchange that appropriate procedure has been followed for providing exit to shareholders of such companies. Subsequently, the designated stock exchanges shall remove the company from the dissemination board,” said the October 2016 circular on the matter.

Virendra Jain, founder of investor association Midas Touch, said the dissemination board had provided little respite to shareholders who were stuck with companies from RSEs. 

There is limited action in terms of trading on this board. The platform does not allow for access to settlement guarantee fund or investor grievance mechanism, unlike the main board. It also does not have the same level of surveillance.

No longer available

• Regional stock exchanges had many exclusively listed companies 
• Many of the firms moved to dissemination board after their bourses shut down
• Many have now headed for the exit
• Ten such companies were removed from the platform this week
• Total number of such exits are in triple figures