The recent move by the Bombay Stock Exchange to suspend trading in 31 companies will add to the woes of many retail investors who are stuck with dud investments due to such steps in the past. About Rs 64,000 crore of investor money has been blocked in companies suspended from trading by stock exchanges. About 1,600 firms have been suspended over the years.
According to stock brokers, the age-old policy of stock exchanges to suspend companies for non-compliance of the listing agreement requires a review. Experts say many company promoters are using this rule as a de-listing method. Companies are generally suspended for violation of listing agreement and procedural issues like not filing results and shareholding pattern, a must under the Securities and Exchange Board of India (Sebi) Act
Among the recent companies suspended are Aster Silicate, listed on the bourses in 2010 after its initial public offer. The share price doubled in a single trading session after it opened at Rs 123 on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). In three sessions, the stock touched a lifetime high of Rs 258 on the NSE and Rs 250 on the BSE and crashed nearly 25 per cent from there. This brazen price manipulation in the counter was also being investigated by Sebi.
Experts say, the policy of frequent suspension of companies from exchanges is sending a wrong signals to retail investors at a time when government has announced the Rajiv Gandhi Equity Scheme to increase retail participation.
