Lok Sabha Question No. 298 (STARRED), answered on 2016-08-05
Subject: Non-Compliance of Listing Norms
Ministry: FINANCE
Asked by: ASHOK SHANKARRAO CHAVAN, M. K. RAGHAVAN

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## t. GOVERNMENT OF II\I}IA ': (FrrNrsTRY OF FTNANCE) PEPARTMENT OF BCONOMIC AFFAIRS)

## LOK SABHA STARRED  QUESTION  No.  *298 TO BE ANSWERED ON FRIDAY, Sth AUGUST,IOI'ISHRAVANA  14, 1938 (SAKA)

## NON.COMPLIAI{CE  OF LISTING NORMS guEsrroN

## *298.  SHRI ASHOK SHANKARRAO CHAVAF{: SHRI M.K. RAGHAVAN:

Will the Minister  of FINANCE be pleased to state:

- (a) the names of the companies whose stocks have been suspended  on stock market  for more than seven years for non-compliance  of listing norms;
- (b) whether  the Security and Exchange Board of India (SEBI) has issued  a set of strict norms for these  companies and frozen their demat accounts with share, bonds and mutual  funds;
- (c) if so, the details thereof and the time by which the new norns are likely to be operationalised;
- (d) the total amount of money lost in these companies  as a result thereof;  and
- (e) whether the Government has taken any step to get back the said public money from the errant  promoters of the companies and if so. the details  thereofl

## ANSWA,R

## MINISTER OF THE MINISTRY OF FINANCE (SHRI ARUN JAITLEY)

- (a)to (e): A statement  is laid on the table of the House.

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Statement  referred to in replv to narts  (a)  to  (e)  of lhe Lok Sabha Starred uestion No. *298  raised bv shri Ashok Shankarrao  chavan and shri M.K.Ra havan arding^  NonC4rt$'"r 'l o1&$fin{,ifqf4p $}re  fqr  gqpwpr,oL$"th  Sggp{,a016

As informed by the Securities and Exchange Board of India (SEBI),  there are 995 and 126 companies respectively on the Bombay stock Exchange  Limiieo (nsg) and National stock Exchange  of India Limited  (NSE), whose  shares have been suspended for more than seven  years for non-compliance  with listing  norms. The details of these companies are available  on the weisites  of the stock exchanges.

Section 2lA of the Securities Contracts  (Regulation)  Act, 1956, read with Rule 2l of the Securities Contracts (Regulation)  Rules, 1957 and Chapter  V of SEBI (Delisting  of Equity Shares) Regulations,  2009, empowers the recognised  stock exchanges to compulsotlty O.tist ihe equity shares  of listed companies  on any of the grounds prescribed  therein, including  those compuni6, whose  trading has been suspended  for more thin six months. Where u Jo*puny hai been compulsorily  delisted under  the Delisting Regulations,  the company, its whole-time  directors.  its promoters  and the companies promoted  by any of them shall not, directly or indirectly,  access the securities market or seek listing  for any equity shares  for a period  of ten ylars from the date of such delisting.

However, given that the suspension  of trading in shares denies the small investors an exit opportunity,  SEBI, vide Circulars dated 30th September,20l3  and 30th November,20l5,  provided that recognised stock exchanges  shall use imposition of fines as action  of first resort in casi of such non-compliance  and invoke suspension  of trading in case of subsequent  and consecutive defaults. In pursuance of the same, SEBI has prescribed  Stand?rd Operating Procedure (SOP) for suspension and revocation  of suspension  of trading in shares.  Furthero  during the process  of suspension of trading.  the depositories, on receipt  of intirnation from the concerneJstockexchange, shall freeze or. unfreeze. as the case may be, the entire shareholding  of the promoter and promoier group in such entity.

The total issued  capital, at face value, of the companies suspended  for more than serren years,  as provided  by SEBI, is as under:

| Narne of Exctrange   |   Total number of suspended companies# | Total Issued Capital at face value (in Rs. Cr.)*   |
|----------------------|----------------------------------------|----------------------------------------------------|
| NSE                  |                                    126 | 3108.04                                            |
| BSE                  |                                    995 | I 0l 94.47                                         |

#Someofthesecompaniesarelistedonboththeexcha

Investment  in equity entails inherent  risk as the stock valuation of a company  depends  not only on the company's performance  but also on a multitude of external  factors.  itris Ueing the case, SEBI ensures adequate disclosures  by listed  companies  to enable investors to make informed investment decisions.  However,  it is stipulated that the promoter of the compulsorily  delisted company  shall acquire equity shares from the public  shareholders  of such delisted companies, by paying them the value determined by the valuer,  subject  to their option  of retaining  their shares