NSE bans Pyramid Saimira from trading from June 1

The National Stock Exchange (NSE) has decided to suspend Chennai-based Pyramid Saimira Theatre Ltd (PSTL) from trading from June 1.

The company's stock price came down to as low as Rs 10.80 in the NSE on Tuesday. It may be noted that the highest price in 52 weeks was Rs 36.75.

According to company Managing Director P Saminathan, “Our secretarial department had failed to file the quarterly corporate governance report.”

However, he informed Business Standard the company would file the reports “today or tomorrow and the issue will be resolved”.

There are some 1,300 listed companies on exchanges, according to information available on the public domain, that have not complied with the listing agreement or on corporate governance issues and they have been suspended.

It may be noted Clause 49 of the listing agreement, which is an umbrella regulation on corporate governance norms, mandates companies to submit a quarterly report, signed either by the compliance officer or the CEO, to the stock exchange within 15 days from the close of a quarter.

According to the Exchange public announcement, the company failed to respond to its notice for non-compliance with provisions of listing agreement.

It may be noted the company is already facing a ban on accessing the public market for seven years from the market regulator Securities and Exchange Board of India (Sebi). This was after Sebi investigations showed that in the PSTL public issue, 98.5 per cent of the shares reserved for employees were allotted to seven persons who were not employed by the company.

Saminathan, one of the promoters and managing director of PSTL, and Nirmal N Kotecha, another promoter of the company, were banned with dozens of other people by Sebi, which stated they would not be allowed to buy, sell or deal in the securities market, including IPOs, in any manner, either directly or indirectly. The regulator’s order came after it conducted investigations in the matter of PSTL relating to the forged Sebi letter and possible manipulation in the scrip in December 2008.

Following this, the company had moved an appeal against Sebi's order to the Securities Appellate Tribunal (SAT). However, the SAT dismissed the appeal in April, as well as the miscellaneous applications filed by the company and three of its shareholders, and imposed a cost of Rs 1 lakh on the appellant company.

SAT was not convinced by the argument of the company and held that the seven allottees were made to pose as employees only to enable them to apply for shares in the employee category in the IPO, while in fact they were “ghost” employees.