SEBI to move against non-compliant firms: 

SEBI to move against non-compliant firms: 

Context

• SEBI to initiate action against non -compliant companies which are exclusively listed on Dissemination Board

SEBI’s norms

• These companies were earlier listed on non-operational/ regional stock exchanges (RSEs) and were required to be placed on DB. The ELCs were required to comply with the directions issued by SEBI vide circular dated October 10, 2016.
• Such companies were allowed to be part of the national exchanges through a dissemination board but were directed to submit a plan of action for listing or providing an exit option to shareholders.
• Further, SEBI can bar such promoters and companies from accessing the securities market for a period of 10 years apart from freezing the shares held by promoters and directors
• As per regulator Sebi’s norms, firms listed exclusively on exiting or de-recognized Regional Stock Exchanges (RSEs) are required to seek listing on at least any other RSE that is not seeking de-recognition and exit.
• However, those companies which fail to list on any other RSE are treated as unlisted entity and have to be moved to dissemination board.

What is Dissemination board?

• Dissemination list or DB is an information disseminating mechanism made available on the bourse’s (stock market) website for buyers and sellers of companies that are listed exclusively on exiting or de-recognized Regional Stock Exchanges (RSEs) and have failed to obtain listing on any RSE

Way Ahead

• The deadline to submit the plan of action was extended until June 30. As per SEBI, of the 2,000 companies listed on dissemination board as on June 30, there are 536 entities that are traceable and yet not submitted a plan of action.
• SEBI has extended the time to submit plan of action by such ELCs till September 30, 2017