Bse For Changes In Cos Act To Fine-Tune Share Transfers

The Bombay Stock Exchange (BSE) will shortly write to the department of company affairs (DCA), suggesting crucial changes in the Companies Act to streamline the process of share transfers and reduce investor grievances. The changes suggested are aimed at making Indian corporates, registrars and investors themselves accountable to either the market regulator or any other external agency.

The recommendations will also seek to reduce the pressure faced by the stock broking community which has in recent times faced flak for the delay in share transfers while corporates and registrars have got away. With investor-grievances against companies increasing, the BSE has now identified a list of 'top 10' companies (in terms of complaints received against them). The exchange has decided to call for a meeting of company secretaries to sort out problems relating to investor-grievances.

 

The company will have to depute an official who will meet the BSE board and place before them a time-bound programme of how these problems should be resolved. The exchange will co-ordinate with the Western India Regional Council of company secretaries and a meeting is likely to be held in the next 10-12 days, top BSE officials said. The suggestions which are set to be made are:

Companies should take necessary steps provided in the law where a slight variation in signatures exists and inform stock exchanges of transfer status

Strict penalty procedures against registrars for wrong rejection in share transfer cases

Transfer deed (Form 7B) should introduce column stating 'signature of shareholder as registered by the company'

Every company with paid-up capital of over Rs 10 crore should have a fully functional share-transfer committee

Legislative changes through which companies can be prosecuted by an agency if investors have been harassed.

BSE president M G Damani has informed the DCA secretary T S Krishnamurthy that investor-grievances relating to share transfer delays at the exchange have risen to 42,000 cases. The exchange will now place these recommendations (mentioned above) before the DCA, which awaits responses from marketmen on the working draft of the proposed Companies Bill. According to the exchange, the problems at the registrar end continues to exist. The registrars have complained of being overworked, not getting their payments in time and not being adequately paid.

The end result is that they have been cutting corners and employed staff which may not be fully competent to cope with these problems,'' a top BSE source said. Further as complaints against companies have piled up, the rejections of share transfers have been on a large scale. "In one case linked to the Tata Share Registry, the non-cooperation has been to such an extent that the registrar refused to tell the shareholder what form of signature difference existed,'' Damani said. The bad delivery cell rules state when the transfer of shares has been rejected twice they cannot be tendered again for transfer. ``This will only ensure that the shares are nobody's property. One can only claim dividend on them and the shareholder will forget about selling them. How does one expect the retail investors confidence in the market to improve if such cases continue to take place?'' he said.