Sebi relaxes norms for listed firms' name change

The Securities and Exchange Board of India (Sebi) has relaxed the provisions for change in names by listed companies. According to the regulator, a company can change its name provided the amount invested in new projects associated with the new name is at least 50 per cent of its assets.

According to the earlier rule, at least 50 per cent of the total revenue of such firms was required to have been from activities associated with the company’s new name for a period of one year preceding the change.

“It is observed from the representations received from a few companies and feedback received from the stock exchanges that companies, where the gestation period of the business is usually longer and the revenue stream often delayed, find it difficult to comply with the provision,” said the Sebi circular.

 

As part of the amendments, Sebi has said the companies can now opt for a change in name provided “the amount invested in the new activity/project (fixed assets + advances + works in progress) is at least 50 per cent of the assets of the company.”

However, the ‘advances’ shall include only those extended to contractors and suppliers towards the execution of a project, specific to new activity as reflected in the new name, it added.