The Federation of Indian Stock Exchanges (Fise) has decided to appeal to the finance and law ministries for an extension of the powers to stock exchanges with regard to implementation of the listing agreement between the bourses and corporate entities.
At Fises last meeting, a resolution was passed underlining the need to give more teeth to the powers vested in the stock exchanges so that companies could be hauled up if they failed to honour the listing agreement.
Sources said it had become a common practice for corporates to garner subscriptions with promises of listing in multiple exchanges. The prospectus almost invariably highlights listing agreements between a number of exchanges. Small investors usually take this factor into consideration when deciding to invest in a scrip.
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However, after the funds had been mopped up, the companies fail to pay up the listing fees to the bourses. The usual procedure in such cases was the suspension of the company and ultimately its delisting. However, this adversely affected the interest of the investor.
Fise feels corporates can be forced to honour the listing agreements if the stock exchanges have the power to impose fines and take penal action. A letter to this effect will be sent to the ministries of law and finance.