Securities and Exchange Broad of India
Relaxing provisions for change in names by companies, regulator SEBI today said any listed firm seeking to undertake such an exercise can do so provided that the amount invested in new projects associated with change of profile is at least 50 per cent of their assets.As per the earlier rule, at least 50 per cent of the total revenue of such firms was required to have been from activities associated with the any company”s new name for a period of one year preceding the change.
“It is observed from the representations received from few companies and feedback received from the stock exchanges that the companies, where the gestation period of the business is usually longer and the revenue stream often delayed, find it difficult to comply with the aforesaid provision,” SEBI said in a circular.
In view of this, the SEBI has modified the above condition, which now reads as:
– At least 50% of its total revenue in preceding one year should have been accounted for by the new activity suggested by the new name OR
– The amount invested in new activity / project (fixed assets + advances + Work In Progress) is at least 50% of the assets of the company. The advances shall include only those extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name.
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Circular No. – CIR/MRD/DP/07/2011,
Dated- June 16, 2011
Sub: Change of Name by Listed Companies
2.2. At least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name.
3. It is observed from the representations received from few companies and feedback received from the Stock Exchanges that the companies, where the gestation period of the business is usually longer and the revenue stream often delayed, find it difficult to comply with the aforesaid provision.
4. In view of the above, it is decided to modify the para 2.2 of the aforementioned circular as under:
2.2. At least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name
Or
The amount invested in the new activity/project (Fixed Assets + Advances + Works In Progress) is atleast 50% of the assets of the company. The ‘Advances’ shall include only those extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name.
To confirm the compliance of the aforesaid provision 2.2, the company shall submit auditor’s certificate to the exchange.
5. All the Stock Exchanges are advised to:-
5.1. implement the above by making necessary amendments to the bye-laws and Listing Agreement, as applicable;
5.2. to bring the provisions of this circular to the notice of the listed companies and member brokers/ clearing members and also to put up the same on the website for easy access to the investors; and
5.3. communicate to SEBI the status of the implementation of the provisions of this circular and the action taken in this regard in the Monthly Development Report.
6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
This circular is available on SEBI website at www.sebi.gov.in.
Yours faithfully,
Harini Balaji
Deputy General Manager
022-26449372
harinib@sebi.gov.in
