scorecardresearch'Vanishing act' by over two dozen listed firms; BSE reaches out: Report

'Vanishing act' by over two dozen listed firms; BSE reaches out: Report

Updated: 12 Jan 2023, 12:12 PM IST
TL;DR.
As per the report, they are already found to be in violation of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
BSE has reached out to multiple companies that have been suspended for not meeting listing requirements.

BSE has reached out to multiple companies that have been suspended for not meeting listing requirements.

Asia’s oldest stock exchange BSE has reached out to multiple companies that have been suspended for not meeting listing requirements, only for their communication to be returned undelivered from their registered office addresses, reported market daily Business Standard.

The BSE has now given them the opportunity for a personal hearing in the first week of February, after which they will be compulsorily delisted from stock exchanges, informed BS.

As per the report, they are already found to be in violation of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and similar norms to remain listed on stock exchanges.

“The exchange has initiated the process of compulsory delisting of companies that have been suspended for more than six months for non-compliance with critical regulations of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015/clauses of the erstwhile listing agreement or suspended for other reasons and have not completed the formalities for revocation of suspension within stipulated timelines,” it said citing an exchange notice to companies.

The companies on the list are from sectors including trading, finance, packaging, textile, realty, and others. Trading and finance companies account for half-a-dozen companies each, noted the report.

A BS analysis of the last available shareholding data for these companies shows an average of over 2,000 individual shareholders stuck in each scrip. Some have over 10,000 shareholders.

The top companies in terms of individual shareholders include Sunstar Realty Development (11,788 individual shareholders), Sai Baba Investment and Commercial Enterprises (11,389), DMC Education (7,732), Acil Cotton Industries (6,346), IBM Watson (4,663), and others, informed BS.

It pointed out that the earliest available price for 20 of the 26 companies is from the 1990s. This was a period of a large number of companies hitting the market. For example, there were 1,336 companies listed in 1994-95. There were 1,402 in 1995-96. Many raised money from investors and then subsequently could not be located. These were called ‘vanishing companies’, it said.

Business Standard reported in 2021 that about 50 companies were not found at their registered address.

Article
How to buy unlisted shares?
First Published: 12 Jan 2023, 12:12 PM IST