Press Trust of India
New Delhi, August 9: In a stern warning on non-compliance of rules by listed firms, regulator Sebi has said the promoters must face the penal action first and the trading suspension or delisting would be the last resort so as to safeguard the interest of investors. The assertion comes in the backdrop of trading having been suspended in shares of more than 1,000 companies for several years for various penal reasons, including for the non-compliance to listing rules.
It has been suggested that these companies should be mandatorily delisted from the stock market as they failed to take any measures to restore trading in their shares despite repeated reminders from stock exchanges and the regulator in the past. Under the Sebi regulations, shares of such companies are moved to a specific platform named ‘Dissemination Board’, where trading takes place in a restricted manner and a price is quoted when someone wants to buy or sell those shares. “The problem in these companies is that they have been there for such a long time and there are no active shareholders and no trading is happening. “In the hindsight, we were also doing certain things which were probably not right,” Sinha told PTI.
“We were suspending the companies left and right for any kind of violation. In 2013, we came out with a new set of guidelines that if you are violating the listing norms, then there would be a Standard Operating Procedure for the actions to be taken. Suspension is the last option,” he added. Explaining further, the Sebi chief said that the first stage of any penal action must be to “hurt the promoter financially”. “Therefore, we have provided under this SOP that you (promoter) can’t get your dividend. We put a ban on the promoter’s economic interest. He can’t get dividend and he can’t sell shares. “Then we impose penalty on promoters, then on the management and after a series of other actions, ultimately comes the suspension,” Sinha said.
