Sebi okays listing of bourses, investor exit norms

Looking to safeguard intrest of minority investors and deepening of capital markets, the Securities and Exchange Board of India (Sebi) on Monday announced a new set of norms for listing of stock exchanges, trading of green bonds and for giving exit route to dissenting shareholders of listed companies.

The market regulator also relaxed the norms for delisting of small companies with thin trading volumes —a move that can weed out an estimated 1,000 illiquid stocks — and expanded the ambit of ‘business responsibility reporting’ to top-500 listed firms from top-100 currently.

In another move to make it easier for unlisted companies to raise funds, Sebi said that those raising funds from more than 49 investors, but less than 200, can avoid penal action of they provide the investors with an option to surrender their securities and get refund with at least 15% interest.

At present, any offer to more than 49 investors is considered a ‘deemed public issue’ and the firms raising funds in this manner face strict penal action by Sebi.

The decisions, taken by Sebi’s board at its meeting, also included introduction of “primary market debt offering through private placement on electronic book” and initiation of a public consultation process for revival of public issuance of convertible securities by listed entities.

One of the most important and keenly awaited move involved a revised set of norms for listing of stock exchanges and depositories, which would help improve governance and transparency of these institutions and also provide easier entry and exit opportunity to domestic and foreign investors.

In another significant move to safeguard minority investors, Sebi proposed making it mandatory for listed firms to provide an exit to dissenting shareholders in case of changes to the objectives for which they had raised money.

The move would help shareholders make an exit if they feel dissatisfied with any change in business plan of the concerned company after raising funds from public investors.

In recent times, there have been many instances where investors had been duped by illicit money-pooling schemes that promised high return on investments.