The market regulator, the Securities and Exchange Board of India (Sebi), in order to protect the interests of small minority investors in non-compliant companies has devised an exit route for these investors even after the stock is suspended from trading.
Sebi on Monday came out with standard operating procedure to be followed by stock exchanges for dealing against the companies who do not comply with certain listing conditions.
Till now, for non-compliance of listing conditions, exchanges had been suspending the trading of the shares of the listed companies, which affected the interest of non-promoters much more than the promoters as the exit route used to be closed for such investors after suspension of trading.
“Therefore, it is now decided that the exchange in case of non-compliant companies would resort to several other measures such as imposition of fines, freezing of shares of the promoter and promoter group, transferring the trading in the shares of the company to separate category, etc., before suspending the shares of the company,” said the regulator in its release.
As a first step, Sebi has proposed an imposition of fines (on per day basis) on the company for non-compliance and delay in compliance with continuous listing conditions.
Furthermore, it has said that in case of non compliance for two consecutive quarters, the exchange should move the shares of non-compliant company to “Z” Category, where the trades would be settled on Trade for Trade basis.