Sebi on Monday allowed companies on the dissemination boards to raise capital for becoming eligible for listing on nationwide stock exchanges.
This move provides relief to over 2,000 companies that were keen to remain listed after the disqualification of several regional exchanges. Around 3,000 companies were migrated to the dissemination board of exchanges following closure of 18 regional exchanges in 2014 of which approximately 1,000 companies got listed on nationwide exchanges or exited the listed space.
The circular issued by Sebi also announced shareholder exit norms to companies migrated to the dissemination board of nationwide exchanges. This order facilitates listing on nationwide bourses, by allowing the companies to meet listing norms through the preferential allotment route to raise capital. A company listed on a derecognized exchange needs to have a minimum net worth of Rs 3 crore and a minimum paid-up capital of Rs 1 crore to get listed on a nationwide stock exchange.
Companies moved to the dissemination board of nationwide exchanges are prohibited from disturbing their capital structure until they list on a national exchange or decide to provide an exit to the shareholders. The companies failing to list despite the new capital raising mechanism will need to compulsorily provide an exit to shareholders and investors.
“In order to protect the interest of all shareholders of such companies, an exit mechanism to investors will be displayed by stock exchanges. The oversight and monitoring of such exit mechanism shall be carried out by the designated stock exchange,” Sebi said.
Companies placed on the dissemination board are directed to indicate their indications by submitting a plan of action within three months. The stock exchanges are directed to review the plan of action and complete the process within six months.
Sebi warned the promoters and directors of these companies against insufficient efforts to provide an exit to investors. The shares of promoters/directors of non-compliant companies will be frozen and their assets/bank accounts attached to compensate the shareholders.