 "A broker laughs while speaking to a colleague, as they trade on their computer terminals at a stock brokerage firm in Mumbai")
Delhi-based Midas Touch Investors Association has moved a special leave petition (SLP) in the Supreme Court in the matter of companies exclusively listed in regional stock exchanges (RSEs).
The SLP seeks to challenge the Delhi high court's dismissal in December of the Association’s plea on alleged injustice to investors in these companies.
Before the HC, the petitioner had objected to the process laid down by the Securities and Exchange Board of India (Sebi) for derecognition of RSEs and delisting of companies exclusively listed on these. The Association had sought that the 5,150 companies on these bourses be delisted individually and a framework for compensating shareholders of such companies for the “huge loss” due to derecognition.
It has appealed the apex court to pass directions to Sebi to ensure that the guidelines in respect of the exit option to RSEs in line with a circular dated end-December 2008 be implemented. This circular contained provisions as recommended by the Anantharaman committee constituted by Sebi for assessing the future of RSEs after demutualisation.
“The circulars of 2012 and 2014 issued by Sebi have failed to regulate the securities market by taking away the right of the stock exchanges as the first line of regulators to monitor companies whose securities are listed on their exchanges,” the petition said.
It argues the HC failed to appreciate that closure of the RSEs will have concomitant consequences on the companies listed exclusively on these and that their shareholders would be denied an opportunity to trade.
“The HC order is likely to reduce Rs 1.5 lakh crore of small shareholders’ wealth into junk. This has been invested by 10 million shareholders in 5,152 companies listed exclusively at 22 RSEs, whose licence to carry on business as a stock exchange has either been cancelled or is in the process of being withdrawn by Sebi,” Midas Touch had said in an e-mailed statement at that time.
The petition was filed in the apex court days before recent comments by the Sebi chairman about providing an exit option for investors in 3,000 defunct companies on the regional bourses. On Wednesday, Sebi chairman U K Sinha told senior journalists that “an exit option will be provided by setting a fair value for the shares. This fair value will be determined by a third-party valuer”.
“If promoters do not give an exit offer, we will take action against them. First, we will debar them from raising funds from the markets. There will be action against the company, the promoters and even directors,” Sinha was quoted in news reports.
Virender Jain, president, Midas Touch, said: “We are pleased to see the Sebi chairman's response in newspapers. They are thinking of acting after so many years.”
FIGHTING FOR EXIT
Jan 2015: Sebi board meeting minutes showed that nine regional exchanges had been derecognised and an equal number were in the process of being derecognised
April 2015: Midas Touch files PIL aggrieved that no steps have been taken by regulator to ensure exit of minority shareholders of companies listed in these regional bourses
December 2015: The learned Court below dismissed the writ petition, drawing parity with another case filed by one Atul Agarwal
May 2016: Midas Touch files SLP in Supreme Court
Source: Midas Touch petition
The SLP seeks to challenge the Delhi high court's dismissal in December of the Association’s plea on alleged injustice to investors in these companies.
Before the HC, the petitioner had objected to the process laid down by the Securities and Exchange Board of India (Sebi) for derecognition of RSEs and delisting of companies exclusively listed on these. The Association had sought that the 5,150 companies on these bourses be delisted individually and a framework for compensating shareholders of such companies for the “huge loss” due to derecognition.
It has appealed the apex court to pass directions to Sebi to ensure that the guidelines in respect of the exit option to RSEs in line with a circular dated end-December 2008 be implemented. This circular contained provisions as recommended by the Anantharaman committee constituted by Sebi for assessing the future of RSEs after demutualisation.
“The circulars of 2012 and 2014 issued by Sebi have failed to regulate the securities market by taking away the right of the stock exchanges as the first line of regulators to monitor companies whose securities are listed on their exchanges,” the petition said.
It argues the HC failed to appreciate that closure of the RSEs will have concomitant consequences on the companies listed exclusively on these and that their shareholders would be denied an opportunity to trade.
“The HC order is likely to reduce Rs 1.5 lakh crore of small shareholders’ wealth into junk. This has been invested by 10 million shareholders in 5,152 companies listed exclusively at 22 RSEs, whose licence to carry on business as a stock exchange has either been cancelled or is in the process of being withdrawn by Sebi,” Midas Touch had said in an e-mailed statement at that time.
The petition was filed in the apex court days before recent comments by the Sebi chairman about providing an exit option for investors in 3,000 defunct companies on the regional bourses. On Wednesday, Sebi chairman U K Sinha told senior journalists that “an exit option will be provided by setting a fair value for the shares. This fair value will be determined by a third-party valuer”.
“If promoters do not give an exit offer, we will take action against them. First, we will debar them from raising funds from the markets. There will be action against the company, the promoters and even directors,” Sinha was quoted in news reports.
Virender Jain, president, Midas Touch, said: “We are pleased to see the Sebi chairman's response in newspapers. They are thinking of acting after so many years.”
FIGHTING FOR EXIT
Jan 2015: Sebi board meeting minutes showed that nine regional exchanges had been derecognised and an equal number were in the process of being derecognised
April 2015: Midas Touch files PIL aggrieved that no steps have been taken by regulator to ensure exit of minority shareholders of companies listed in these regional bourses
December 2015: The learned Court below dismissed the writ petition, drawing parity with another case filed by one Atul Agarwal
May 2016: Midas Touch files SLP in Supreme Court
Source: Midas Touch petition
