Half of all companies listed on regional bourses untraceable

Nearly 50 per cent of companies listed on regional stock exchanges (RSE) across the country have vanished with investor money. According to Securities and Exchange Board of India data there were 2,253 companies as on October 10, 2016, on the dissemination board of the BSE and the NSE.

All these companies had moved to the dissemination board from 16 RSEs, after most of them were shut down in 2015 following derecognition by SEBI. Of those on the dissemination board, 1,088 companies are not traceable, SEBI said.

All the companies that were on the dissemination board were asked to submit a plan to get listed on recognised stock exchanges such as the BSE and the NSE, which follow stringent networth and other listing criteria, or provide an exit opportunity to shareholders. However, only 16 per cent or 376 companies have so far submitted a plan to list on the main exchanges.

Less than 10 per cent or 189 companies among those on the dissemination board have acquired the licence to move to the BSE and the NSE, while 64 companies were removed from the dissemination board. Still there are 536 traceable companies which are yet to submit their plan to list on the main board and only a few out of these have made representation to the regulator.

SEBI on Friday said that it has cracked the whip on companies which have not submitted a plan to migrate to the main stock exchanges. The regulator ordered freezing of shares of the promoters and directors of such non-compliant companies and have barred them from accessing the capital market for a period of 10 years. SEBI also ordered attachment of bank accounts of the promoters and directors of non-compliant companies.

“With respect to the 1,088 companies which are not traceable, a process has been initiated for their inclusion in the list of companies identified as ‘Vanishing’ (maintained by Ministry of Corporate Affairs),” SEBI said.

Once a company is declared as vanishing, the regulator debars its directors and promoters from accessing the capital market, in addition to actions that may be taken by the Registrar of Companies, Ministry of Corporate Affairs, including prosecution of these promoters and directors.

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