Companies on defunct bourses get more time to submit action plan

Markets regulator Sebi on Thursday extended the deadline till March 31 for companies listed on non-operational bourses to submit their future action plan.

Now, exclusively listed companies (ELCs) on the dissemination board can submit their action plans to either list on nation-wide bourses or provide exit option to shareholders by March 31.

ELCs are entities listed on non-operational exchanges and are currently on dissemination board of functional bourses where they are not traded.

The Securities and Exchange Board of India (Sebi) had in October 2016 provided three months time to the ELCs to submit an action plan to list in nation-wide bourses or to provide exit to shareholders to the designated stock exchanges.
 
In a circularon on Thursday, the regulator said "in light of representation received seeking extension of time to submit plan of action, it is decided to extend the time till March 31, 2017".

To safeguard investors of firms listed on non-operational bourses, Sebi in October allowed ELCs to raise capital through preferential allotment route to meet listing requirements.

Besides, the regulator had issued a new framework to provide an exit mechanism to investors of such companies.

The regulator said ELCs on the DB will be required to exercise one of the two options — either raise capital for listing on nation-wide stock exchanges or exit from the dissemination board.

The nation-wide stock exchanges hosting the ELCs on its dissemination board would be referred as designated stock exchanges, Sebi had said.

To facilitate listing on nation-wide stock exchanges, the ELCs on the dissemination board would be allowed to raise capital for meeting the listing requirements through preferential allotment route.

In case the allotment is made to promoters/public such that it is in excess of the threshold limits (5 per cent or 25 per cent) of the Sebi SAST (Substantial Acquisition of Shares and Takeovers) Regulations, then provisions of SAST Regulation will not be applicable for the proposed acquisition.

This is subject to condition that the overall holding of the promoter group should not exceed 75 per cent of the paid-up capital of the company.

The ELCs which fail to list on the nation-wide stock exchanges under the mechanism would provide exit opportunity to its investors, Sebi had said, adding that it would take action against companies that will continue to be on the dissemination board.