Shell Companies Crackdown: BSE To Delist 200 Firms Tomorrow

Bombay Stock Exchange i.e. BSE is all set to delist 200 firms. This mostly includes those companies that have remained suspended for more than 10 years and are under liquidation. BSE has taken this step at a time when authorities are clamping down on shell companies. Experts believe that this is a healthy move and would strengthen the governance of the stock market.

The Delisting Saga

Earlier in the august, SEBI had directed the stock exchanges to act against suspected shell companies, while the government has already taken a bold step to deregister around 1.75 lakh firms that have not been actively carrying out any business activity for a long time.

It took three circulars for Bombay Stock Exchange to announce the list. In the first circular a list of 117 companies that have been suspended for more than 10 years was released. It was followed by a list of 28 companies in the second circular that are under liquidation and have remained suspended for more than a decade. In its third circular BSE mentioned 55 companies to be delisted.

The Players and the Rules of the Game

This move by SEBI is in pursuance of the order of the “Delisting Committee of the Exchange”. The delisted firms include Sunrise Zinc, Rams Transformers, Maruti Organics, Binaca Synthetic Resins, Regent Chemicals, Chetak Spintex, Global Industries, Manav Pharma, Vishal Chairs, Rohini Strips, Mahendra Cements, Thapar Exports, Sarla Credit & Securities, Canvay Chemicals and Karan Finance.

As per the delisting regulations, the company, its promoters and whole time directors would be debarred from the services of the securities market for a period of 10 years from the date of delisting. Also, as directed by SEBI, for a period of 5 years, the companies would be shifted to BSE dissemination board.

These companies would cease to be listed on the trading platform and would not be available for trading. An independent valuer would be appointed by the BSE to determine the fair value of these companies and the promoters would be required to purchase the shares from the public shareholder at this determined value.