Sebi to ensure orderly migration of companies exclusively listed on exiting stock exchanges

The Securities and Exchange Board of India (Sebi) has decided to proceed with compulsory de-recognition and exit of those stock exchanges that have not achieved the minimum turnover of Rs1,000 crore at the end of the stipulated period, ie 30 May 2014, and has directed companies exclusively listed on such non-compliant exchanges to get themselves listed on national stock exchanges before the exit of the exchange.

Sebi has also directed nation-wide stock exchanges to facilitate such migration on a priority basis through creation of a separate dedicated cell to expedite processing the listing requests from such companies.

Sebi, through a circular dated 30 May 2012, had issued guidelines in respect of exit options to stock exchanges.

In terms of these guidelines, if the stock exchange is not able to achieve the prescribed turnover of Rs1,000 crore on continuous basis or does not apply for voluntary surrender of recognition and exit before the expiry of two years from the date of Sebi circular dated 30 May 2012, Sebi will proceed with compulsory de-recognition and exit of the stock exchanges.

The provisions of the circular are applicable for all those stock exchanges which have not achieved the prescribed turnover of Rs1,000 crore on continuous basis on or before 30 May 2014, Sebi stated.

Sebi has directed companies exclusively listed on such non-compliant stock exchanges to opt for listing in nation-wide exchanges after complying with listing norms of main board or the diluted listing norms, if any, on or before the exit of the exchange, either on voluntary or compulsory basis.

Sebi has directed nation-wide stock exchanges to facilitate the listing of these companies on priority basis in a time bound manner. For this purpose, these nation-wide stock exchanges have been asked to immediately create a separate dedicated cell to expedite processing the listing requests from such companies.

Such exclusively listed companies may also opt for voluntary delisting before the de-recognition of the stock exchanges by following the existing delisting norms of Sebi in terms of Sebi (Delisting of Equity Shares) Regulations, 2009.

Sebi also directed nation-wide stock exchanges to provide a platform to these companies to facilitate reverse book building for voluntary delisting using their platform.

With a view to facilitate voluntary delisting, if they so desire, Sebi has clarified that for such companies the requirements of 'Minimum Public Shareholding' prescribed in the Securities Contracts (Regulation) Rules, 1957 and the Listing Agreement, will not be applicable.

In case of companies exclusively listed in the non-operational stock exchanges that are not traceable or where the data available is more than three years old, the process of inclusion in list of companies identified as 'Vanishing' (maintained by ministry of corporate affairs) may be initiated by the respective stock exchanges.

As per the 'Exit Circular' the exclusively listed companies, which fail to obtain listing on any other stock exchange, which do not voluntary delist or which are not considered as 'Vanishing companies', will cease to be listed company and will be moved to the dissemination board by the existing stock exchange.

Stock exchanges which are being derecognised either on voluntary or compulsory basis have been directed to place their exclusively listed companies on the dissemination board.

These exchanges have also been directed to ensure that the database of the exclusively listed company is transferred to Sebi and to those stock exchanges on whose dissemination board, the shares of these companies are available.