SEBI takes stock of firms listed on non-functional exchanges

SEBI has undertaken a census of corporate entities that are “listed” only on the currently non-functional regional stock exchanges. The stock market regulator wants to have a run-down of theses entities, majority of which have not been compliant with the listing norms and form a significant part of “vanished” companies.

According to a SEBI estimate, some ₹73,000 crore worth of paid-up capital are locked up in 15,000-odd companies. SEBI has asked all of the 16 regional stock exchanges (RSE) on February 4 to fish out updated details, including directors’ identification numbers or promoters’ PAN, last filed annual report, check them up and submit the collated data within 45 days.

Sources said SEBI recently woke up to the reality that RSEs, which are on their way out, would also take down with them the database of these vanishing companies without a remote chance of tracing them out.

SEBI, in its communication, said “in order to ensure that exchanges have the basic details of the companies listed on their platform readily available,” RSEs should upload detailed information about these companies on their websites by February 24 for public comments.

The regulator has also asked to specify if there were any discrepancies after applying due diligence on the data.

The RSE governing boards have been told to certify the data as well and ensure compliance of this exercise.

Sources pointed out that as many of the RSEs are non-operational for non-compliance, or derecognised, or have opted for voluntary surrender of their recognition, hardly have resources left to follow the latest SEBI prescription.

“It’s like flogging a dead horse. It’s coming late in the day. SEBI has always been part of the Union Ministry of Corporate Affairs-initiated chase for the vanishing companies which began in 2005, and did not put up an act to have the big picture,” said an official of a non-functional stock exchange.

The Coordination and Monitoring Committee (CMC) on vanishing companies not only has the ministry representatives, but also from SEBI, the Registrar of Companies and the RBI.

The CMC earlier noted that SEBI had not “renewed” or “reviewed” the orders of debarment issued between 2000 and 2002 against the directors and promoters of some of the vanished companies.