Rs 58,000 cr blocked with suspended cos

TRACKING THE MISSING LINKS

BSE & NSE delisted 1,450 cos since 1996 for listing norm violations

 THE SUSPENSION of over a thousand companies by Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) since 1996 has blocked over Rs 58,000 crore of individual equity investors' money. Their hard-earned money is stuck with these companies that were suspended by the two exchanges for violation of listing agreement. 

    A SundayET analysis has shown that almost 95% of the total market capitalisation of the 876 suspended companies for which data is available, is public and belongs to individual investors. Promoters' holding in these firms is as low as 5%. 
    Promoters of most of these companies sold their shares in the open market before delisting and consequently their holdings came down below 5%, and in some cases, their stake went down to sub 1% levels. The value of promoters' holding was merely Rs 3,290 crore against the total m-cap of Rs 61,699 crore for those companies. The BSE has no data for another 536 companies whereas NSE doesn't have any data for 38 companies, which were also suspended. 
    According to the analysis, BSE and NSE together suspended as many as 1,450 companies of which 1,325 companies were suspended by BSE and 125 by NSE. 
    According to Neville Dumasia, head of governance, risk and compliance, KPMG, in order to deal with such issues, the regulator should make the listing norms more stringent so that no such companies can get listed. Also, there has to be faster dissemination of information to retail investors so that they protect themselves in time. 
    According to Kishor Ostwal, CMD, CNI Research, the security of investors' hardearned money is a major issue. 
    "The exchanges should come out with some amnesty schemes so that many of these companies again get listed and investors get the right exit route," he said. 
    And necessary steps should be taken to penalise promoters of those companies, or those companies should be simply categorised as vanished companies. 
    Around 5,007 companies are listed on BSE and NSE together. These exchanges suspended as many as 1,450 companies, which is over 22% of the total listed companies in both the exchanges. In terms of exchanges, the percentage of suspended companies in BSE works out to be around 26%, whereas, it is around 8% in NSE. 
    A mail seeking answers on whether these companies can be termed as vanished companies and whether the regulator and exchanges are taking any steps to give exit route to investors, was sent to BSE, NSE and Sebi. Sebi and BSE did not give any response. 
    "All listed companies are required to comply with the various provisions of the listing agreement from time to time," an NSE spokesperson said in his reply. 
    "The exchange issues suspension notice to companies only after providing adequate notice/reminders to companies to comply with the relevant clauses of the listing agreement," he added. "On complying with the clauses of the listing agreement, the suspension of trading in the securities of the company shall be revoked." 
    anand.rawani@timesgroup.com