In a mammoth clean-up exercise, markets regulator Sebi is planning to push for delisting of over 4,200 listed companies whose shares are not being traded, and promoters refusing to give exit opportunity to investors would face strict penal actions.
These include over 1,200 companies whose shares are listed on national bourses BSE and NSE but where trading has been suspended for various non-compliance issues for over seven years. Besides, there are over 3,000 companies listed on various regional stock exchanges that have become defunct, Sebi Chairman U K Sinha said today.
He also warned of strong action against the auditors who close their eyes to the lapses in the financial accounts of listed firms. “So far, we have had a hands-off approach on auditors, but we will take action if something serious comes to our notice. Auditors cannot go scot-free if they have been certifying the books for years without pointing finger at the lapses,” Sinha said.
The exercise for over 4,200 listed firms would be completed this year. Such exercises would be taken up going forward to clean up the market from what the Sebi chief described as “a source of nuisance”.
In an interaction here, Sinha said delisting of these companies is one of the key focus areas for the regulator in the current fiscal. “We are going to reduce the number of listed companies. We have already reduced the number of stock exchanges by successfully closing several defunct or non-functional regional exchanges. They were centres of risk and there were series of litigations but we have won all of them.
“Now our target is to reduce the number of listed companies where no or little trading is taking place,” he said, adding that it was not something to be happy about to have maximum number of listed companies if there was no trading activity happening.
“There are two sub-sets—first there are over 3,000 companies exclusively listed on regional exchanges and then the second is the list of companies where trading has been suspended for a long time. To start with, we have decided on a seven-year threshold and there are over 1,200 such listed companies together on BSE and NSE,” he said. “We will do it this year,” he said.