Easier De-listing Norms for Small Firms Ready, Notification Soon

The government and the Securities and Exchange Board of India (Sebi) would soon put up a framework for delisting of securities. A more simplified procedure for delisting of small companies would also be put in place, according to official sources.

Enacted in 2005, the Securities Laws (Amendment) Act allowed delisting of securities, necessitating the creation of a delisting framework.

“In order to provide statutory backing to the delisting framework, rules and regulations have already been finalised and will be notified soon,” the sources added.

Sebi, the capital market regulator, is also in the process of finalising rules for exchanges to transfer the functions and duties of a clearing house to a recognised clearing corporation for periodical settlement of contracts and delivery & payment for securities. This is expected to lead to a faster and safer settlement on an exchange platform.

The Securities Contract (Regulation) Act-1956 was amended in 2004 to provide for clearing and settlement by a clearing corporation of an exchange with the approval of Sebi.

In order to develop an equity market for small and medium enterprises (SMEs), the market regulator has suggested multiple exchanges dedicated to SMEs to develop a niche market for listing and trading of securities.

Sebi will come out with a suitable framework for recognition and supervision of such exchanges, the sources said. The enterprises with a post-issue paid-up capital of up to Rs 25 crore would be listed on such exchanges and the trading lot for them would be Rs 1 lakh.

Sebi is also in the process of finalising rules for exchanges to transfer functions and duties of a clearing house to a recognised clearing corporation.

The Securities Contract (Regulation) Act-1956 was amended in 2004 to provide for clearing and settlement by a clearing corporation of an exchange with the approval of Sebi.

This corporation will settle contracts and delivery & payment for securities to achieve the objective of safer and faster settlement. The regulator is also for multiple exchanges dedicated to SMEs to develop a niche market for listing and trading of securities.