Leading stock exchanges BSE and NSE have restricted trading in stocks of as many as 40 new companies on account of their failure in meeting the market regulator SEBI’s direction on dematerialising of shares.
The action comes after these companies failed to convert a mandatory 50 per cent public shareholding into demat or electronic format, or either they did not submit the shareholding data for July-September quarter or provided the exchanges with wrong shareholding patterns.
The restriction in trading of these 40 stocks comes on top of shares of close to 500 companies already being kept under restricted-trade category by the two bourses.
As per SEBI regulations, shares of all listed companies having less than 50 per cent public holding in demat form need to be traded only in the ‘Trade-for-trade’ segment of the exchanges. The trading in this segment requires compulsory delivery and these shares can be sold only after a buyer is found at their quoted prices.
In a circular, BSE has listed out 39 such stocks that are being moved to ‘Trade-for-Trade’ group with effect from November 23, 2012. The NSE has also listed out three such stocks, which includes two named by BSE as well, taking the total number of such stocks to 40.
These include Deccan Chronicle Holdings, Falcon Tyres, Ion Exchange India, Prithvi Information Solutions, Rama Vision and Vikash Metal and Power Ltd.
In addition, BSE said that as many as 459 stocks would continue to be traded on ‘Trade-for-Trade’ basis due to their non-compliance to SEBI’s demat shareholding norms.
These companies include Austral Coke and Projects Ltd, Bhilwara Spinners, Dhanlaxmi Cotex, India Cements Capital, Jaybharat Textiles and Real Estate Ltd, Oswal Yarns, Sakthi Finance and Zenotech Laboratories Ltd.
On the NSE, shares of 15 companies would continue to be traded on ‘Trade-for-Trade’ basis, including stocks of Austral Coke, Jain Studios, Sakthi Finance and Jupiter Bioscience Limited.
Besides, BSE has named a total of 448 companies whose shares would continue to be traded in ‘Trade—for—Trade’ group “for reasons other than the demat criteria”. NSE has named 10 companies in this category, including Birla Power Solutions, Shree Ashtavinayak Cine Vision and 3i Infotech Limited.
NSE also said in a circular to its member brokers that two companies — Koutons Retail and Samtel Color — have complied with demat regulations, but would continue to remain under restricted trade category due to ‘surveillance’ reasons.
However, BSE has decided to move 100 stocks out of this restricted-trade category with effect from November 23, as they have complied with SEBI’s regulations for demat shares.
These include 3i Infotech, Eastern Sugar and Industries Ltd, Monnet Sugar, Ontrack Systems, Shree Ashtavinayak Cine Vision and Zenith Healthcare Ltd.