The Gujarat High Court will hear next Thursday (September 27) a public interest litigation (PIL) against the June 20 order of stock market regulator SEBI that the petitioner maintained was against the interests of regional stock exchanges (RSEs), investors and shareholders.

On June 20, SEBI had notified that RSEs would be required to have a net worth of at least Rs 100 crore until May 31, 2014, and turnover of Rs 1,000 crore per annum. If the RSEs failed to create such networth and trading platform, SEBI would derecognise such exchanges.

Challenging this, Kirit Bhatt, Chairman of the Investor Protection Education and Research Centre, Ahmedabad, said this would be against the interests of RSEs, investors and shareholders. He has made SEBI, the Union Ministry of Corporate Affairs, New Delhi, and the Managing Director of Ahmedabad Stock Exchange Ltd (ASE) as respondent in the case, P. K. Pancholi, counsel for the petitioner, said. The High Court took cognisance of the case on Thursday.

The petitioner, who is also a shareholder of ASE, said despite representations made by various organisations and stock exchanges to reconsider and postpone implementation of notification, SEBI took no corrective action. The “illegal” notification had been issued without any prior consultations with RSEs, no suggestions were invited and no opportunity of hearing given.

He also questioned the logic behind fixing the RSEs’ networth at Rs 100 crore and maintained that SEBI, having “malafide intention” had done so to ensure that these exchanges stopped working. The resultant effect of this notification is that the investors may not get any dividend on investment. “It appears that with a view to help and to see that only a few exchange Like NSE and BSE survive, this notification was issued,” he maintained and requested that the order be set aside.

(This article was published on September 21, 2012)
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