Move To Bring All Issue Provisions Under Sebi Act

The move will bring all matters relating to the issue of shares by listed companies within the ambit of the Sebi Act, which are covered at present by the Companies Act 1956.

A committee member told Business Standard: "We are examining whether provisions covering the issue of shares and prospectus can be transferred to the Sebi Act."

The seven-member panel will submit the redrafted companies bill to the finance ministry by January 1, 1997.

If the responsibilities are finally bifurcated, companies coming out with equity offerings will not be required to file the issue documents with the registrar of companies, as is the practice.

The role of the registrar of companies as regards issue of shares is at present restricted to `take the documents on record'.

Noted tax consultant Amitav Kothari said: "Sebi is anyway monitoring raising of resources by companies by vetting the prospectus.

Bringing provisions relating to issue of shares and prospectus within the ambit of the Sebi Act will be a step in the right direction."

Only listed companies come within the purview of the Sebi Act. Although 13,000 companies out of a total 3,93,000 are listed on stock exchanges, they account for over 93 per cent of the industrial activities.

The panel is trying to do away with overlapping provisions which had simultaneously been incorporated in various legislations -- Companies Act, Sebi Act and Securities Control Regulation Act.

The committee member said: "We are trying to iron out the overlapping areas of various legislations. Discussions are on with Sebi officials so that there are no areas of conflict."

There are several conflict areas among the various acts which has often posed serious compliance problems for companies.

While Section 73 of the Companies Act, 1956, requires every firm offering shares or debentures to the public to complete its listing formalities including allotment of shares and obtain permission from the stock exchanges within 10 weeks from the date of closing of subscription lists, a recent Sebi circular says that allotment of shares should be completed within 30 days of the closure.

Moreover, both the Sebi Act and Companies Act 1956 are silent on global depository receipts and Euro-issues which are among the more popular modes of mopping up resources by corporates and are guided by finance ministry directives.