The Securities and Exchange Board of India (SEBI) has issued revised guidelines for companies seeking change of name.
Such companies have to, inter alia, ensure that at least 50 per cent of its total revenue in the preceding one year has been accounted for by the new activity suggested by the new name, or the amount invested in the new activity/project (ie, fixed assets + advances + works in progress) should at least be 50 per cent of the assets of the company.
'Advances' should include only those extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name.
SEBI has directed companies to submit auditor's certificate to the exchange on compliance with the new guidelines.
It has also advised stock exchanges to implement the guidelines by making necessary amendments to the bye-laws and Listing Agreement, as applicable.
SEBI said the revision of guidelines has been necessitated by the number of representations received from some companies and feedback received from the stock exchanges that the companies, where the gestation period of the business is usually longer and the revenue stream often delayed, find it difficult to comply with the provision of the guidelines.