| Sebi talks tough on Oct 1 deadline for new corporate governance norms |
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Mumbai, 4 August With less than two months to go for implementation of the new corporate governance norms, Securities and Exchange Board of India ( Sebi) has warned India Inc to comply or face the music. The capital markets regulator has ruled out extension of the October 1 deadline. Nearly 1,000 companies are yet to comply with some or the other provision of the corporate governance norms. UK Sinha, the chairman of Sebi, hinted on Monday that it would act against non- compliant companies as briskly as it did last year against those which'd failed to meet the 25 per cent minimum public shareholding requirement. " We passed an order against non- compliant companies a day after the deadline for meeting the minimum public shareholding norms got over. That should indicate our seriousness over compliance issues," he said. Adding: " I'd suggest (companies) come to us if facing any issues while complying with the regulations. We will make reasonable accommodation," he said on the sidelines of an event organised by the Institute of Companies Secretaries of India ( ICSI). Under these norms, issued by Sebi in February, companies need to have at least one woman on the board of directors. Also, independent directors ( IDs) can serve a maximum of up to seven years on the board, not more; nominee directors can no longer be IDs. Besides, companies have to rotate their auditors periodically and expand the role of the audit committee. "Sebi's corporate governance norms have gone beyond what has been stated in the Companies Act. Many companies are finding difficulties in adhering to these," said Somasekhar Sundaresan, partner, J Sagar Associates. Not all agree. " IDs and women directors are only one part of the new norms. There is no dearth of qualified professionals. There is also the aspect of mandatory disclosures and expanding the role of the audit committee. These are doable, if there is intent," said M S Sahoo, secretary, ICSI. "I'd suggest (companies) come to us if facing any issues while complying with the regulations" UK SINHA Chairman, Sebi |
| About 700 listed firms vanish from regional exchanges |
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With less than two months to go for implementation of the new corporate governance norms, the Securities and Exchange Board of India ( Sebi) has warned India Inc to comply or face the music. The capital market regulator has ruled out extension of the October 1deadline. P 16 > SACHIN P MAMPATTA Mumbai, 4 August A few skeletons are likely to tumble out of the cupboard with the end of the country's regional stock exchanges — among other things, in the form of what could be the largest- ever case of corporate disappearances in India. A Business Standard analysis of corporate affairs ministry records and data from eleven regional exchanges reveals around 700 listed companies have likely vanished, without a trace of these entities at their registered addresses — many times more than the 87 currently identified as ' vanishing companies' in official records. The exchanges, too, have received no correspondence from these companies for a long time. According to investor association estimates, the total value of the ' vanishing companies' could be in excess of ₹ 29,000 crore. 'Vanishing companies' are those listed entities that have raised money from investors through initial public offerings and then disappeared. The corporate affairs ministry's coordination and monitoring committee (CMC), which has representatives from the government, the Securities and Exchange Board of India ( Sebi) and the Reserve Bank of India, has been monitoring the situation. In the past two decades, there were no new instances of vanishing companies in the country. But according to the minutes of the previous CMC meeting, the chairman of the committee noted the number of such companies was likely going up significantly, with a majority of new instances from regional stock exchanges. The minutes said there were 2,397 companies that defaulted in filing their balance sheets appropriately. Of these, 1,012 were listed on BSE or the National Stock Exchange ( NSE), while the rest ( 1,385) were from regional bourses. More than half the companies listed on either BSE or NSE could be ' vanishing'. " The chairman observed the 508 listed entities that had been delisted appeared to be dubious and most ( if not all) of these would turn out to be ' vanishing companies'," said the minutes of the meeting, held in July last year. Even if one assumes the proportion of similarly- affected companies among regional exchange- listed ones would not be higher than the proportion for firms listed on the two national bourses, the number of ' vanishing companies' on regional stock exchanges would come to around 700. Turn to Page 22 > MISSING IN ACTION Regional Stock Exchange Delhi Madras Jaipur Vadodara Ludhiana Bangalore Cochin OTCEI Bhubaneswar
No. of listed firms Non- compliant firms 2,293 1,497 764 531 235 251 163 141 49 38 699 445 319 218 177 60 45 Numbers for bourses with data available on non- compliant companies Source: Regional stock exchanges |
| Click: Article continued from…About 700 listed firms vanish |
| Over 700 listed firms vanish from regional exchanges |
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Non- compliance indicates the firms did not adhere to requirements like filing financial statements with the exchanges concerned. How many of these would be classified as ' vanishing' would depend on whether or not these companies are traceable at their registered offices. Virendra Jain, founder of Sebi- registered investor association Midas Touch believes a significant number of these non- compliant companies are likely to fall in the ' vanishing' category. " Around 50 per cent of the companies are likely to be vanishing," he says, suggesting the number of vanishing companies could be more than 1,800. Midas Touch had earlier written to Sebi on the issue of companies exclusively listed on regional exchanges and how their closure, effective from May this year, would affect investors in these companies. "By a conservative estimate, the market capitalisation of the 4,644 companies exclusively listed at regional stock exchanges would be above ₹ 2,00,000 crore," the association had said in its letter to Sebi. Going by this figure, the combined value of ' vanishing companies' could be around ₹ 30,000 crore, if these are 700odd; and close to ₹ 80,000 crore, if around 1,800 companies are 'vanishing'. In 2012, the regulator had asked all exchanges that did not meet the criteria of ₹ 100 crore minimum net worth and ₹ 1,000 crore volumes to close down by May 2014. The move led to closure of many regional stock exchanges —21 of those existed then. Four regional exchanges have already exited business since, while 10 others are in the process of winding down. Sebi has said it will ask the others to also exit compulsorily. As for the 4,000- odd companies listed only on regional exchanges, Sebi had said these could migrate to the national exchanges; none has done that so far, according to spokespersons for exchanges. The regulator had asked companies to classify errant companies as 'vanishing', but, apart from the estimates mentioned, there is no official word on how many firms actually fall in this category. A spokesperson for the Madras Stock Exchange said a list of ' vanishing companies' had been sent to the registrar of companies for action. Emails on the issue sent to the other regional exchanges and the regulator did not elicit any response. >FROM PAGE 1 |
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