New curb on promoter shares of suspended firms

Promoters shares will be frozen if they fail to comply with delisting norms

Securities and Exchange Board of India (Sebi) has imposed a new restriction on promoters of companies suspended from stock exchanges.

Sebi has directed freezing of shares of promoters of such delisting-bound companies whose 'fair value' is positive, till the promoters of such company provide an exit option to public shareholders.

The promoters will have to pay their public shareholders a ‘fair value’, determined by an independent valuer appointed by exchanges, said Sebi. Promoters and whole-time directors of a compulsorily delisted company shall also not be eligible to become directors of any listed company till the exit option is provided.

Under current delisting norms, an entity compulsorily delisted, its wholetime directors, promoters, and companies promoted by any such person shall not, directly or indirectly, access the securities markets for a period of 10 years from the date of compulsory delisting, it noted.

Sebi has asked stock exchanges and depositories to coordinate for ensuring compliance with these requirements.

The BSE exchange recently sent compulsory delisting notices to 194 companies. Trading in these has been suspended for nearly 13 years, for non-compliance with the listing agreement. The regulator wants public shareholders in these companies to be adequately compensated.

There are 1,021 companies listed on the BSE and 200 on the National Stock Exchange, which have been suspended for more than seven years in this regard.