Listing amnesty schemes, which were initiated by Delhi Stock Exchange (DSE) and Calcutta Stock Exchange (CSE), have received an enthusiastic response from many of the defaulting companies. The exchanges have managed to relist over 500 companies by waiving off penalties triggered by non-compliance with exchange listing rules. Regional stock exchanges (RSEs), like Ahmedabad, Pune and Bangalore, are also expected to follow suit in the coming months.
With over 700 fully-compliant companies, Delhi Stock Exchange (DSE) is all set to start trading in its own capacity over the next couple of months. DSE has set up its own trading terminal — Delhi Online Trading System (DOTS) — and is currently awaiting for the final nod to start operations.
“We have received fairly good response from listed companies which have been inactive. We have managed to bring in over 300 companies through the amnesty scheme. We’ll restart our trading operations with 700 fully-compliant companies,” said HS Siddhu, ED, DSE.
Mr Sidhu expects other non-compliant companies to join DSE once it starts regular trading. “We could initiate another round of listing amnesty if need be,” he added.
The emergence of BSE and NSE as nation-wide bourses dealt a severe blow to RSEs. While smaller exchanges are clinically dead, the bigger ones, like Delhi, Bangalore, Ahmedabad and Calcutta, are fighting to stay in business.
Daily traded turnover has come down to as low as Rs 20-30 crore in key exchanges like Delhi and Calcutta, and the only source of income for these exchanges is the listing fees collected from companies.
With trading almost coming to a nought in regional bourses, companies that had multi-listings — companies listed on NSE and BSE and also in a regional exchange — stopped paying listing fees or complying with regulations of RSEs.
Listing amnesty scheme is a hassle-free route for companies to re-enter regional exchanges.
Under the listing amnesty, regional bourses waive off penalty on listing dues, non-publication or filing of relevant disclosure documents and reporting of quarterly results. Using this route, defaulting companies can revoke suspension of trading, list additional shares pending for listing and get their records (with respect to investor grievances) cleared from balance sheets.
“Often, we see companies opting for a relisting purely for reason of sentiment. Companies that are located in certain cities, like Delhi or Calcutta, and has a local flavour to their business, are traded better in regional exchanges,” said Molly Thambi, CEO, Calcutta Stock Exchange (CSE).
CSE managed to bring in over 200 companies to its fold under the listing amnesty scheme. The exchange has extended the amnesty period to June 30 this year. CSE, which has partnered with BSE for sharing BSE’s trading platform, is also looking for a tie-up with NSE.
According to Nihali Mitra, CEO, Pune Stock Exchange, shareholders also benefit a lot from listing amnesty schemes. “There are shareholders in companies that are not adhering to listing rules. Once the exchange gets them relisted through amnesty schemes, shareholders will benefit from regular disclosures and corporate filings. We may consider an amnesty scheme in the coming months,” said Ms Mitra.
Among companies that have opted for a relisting are several small-cap businesses that are not eligible to trade on BSE or NSE, because of their small market capitalisation. Companies that are thinly traded on major exchanges are also opting for regional listings. Companies also look for regional listing, as it paves a way for them to get listed on national exchanges, source said.
At the height of the bull run, business groups that wanted an easy listing bought shell companies listed on regional exchanges and upgraded themselves to higher exchanges. “Small companies with insignificant business activities will be complying with regional bourses on hopes that some big business groups would buy them over for an easier listing on national exchanges,” said a Calcutta-based broker empanelled with CSE.