Filed by Mr. Atul Agarwal, a Delhi-based pilot, it urges the Delhi court “to take action in the matter to protect the interest of over one crore public shareholders / investors of these 1,400 suspended companies, whose enormous investment of more than Rs. 1,79,550 crore in these suspended companies is at stake”.
SEBI, Bombay Stock Exchange (BSE) and the MCA (Union ministry of corporate affairs) are respondents, in addition to the Union government. The respondents have asked for time until May 30, 2012 when the hearing resumes, to respond. The petition also seeks revocation of BSE’s recently announced relisting guidelines.
Suspended companies constitute 16.6% cent of the total list of the BSE, the petition says.
Mr. Ajay Veer Singh, Partner, BS Jain &Co, who is advising Agarwal, said, “This is a conservative estimate, based on data available for 949 companies. The entire amount could be much higher.”
According to publicly available data, these 949 companies have a public shareholding of 8,978 crore shares. The petitioner assumes that each of these shares were bought by investors for at least Rs 20, (the IPO price may be anything between Rs. 10 per share and Rs. 500 per share or more) arriving at the sum of Rs 1.8 lakh crore.
The petition alleges the exchange has not done anything to protect the interests of the investors.
It has accused BSE and the promoters of these companies of colluding to get listed, “then collecting money from innocent investors by making tall promises and, thereafter, getting suspended for non-compliance of the listing agreement and finally getting delisted and disappearing with public funds”.
The petition notes the MCA and SEBI maintain a portfolio, called the Investor Education and Protection Fund. The petitioner filed a petition under the Right to Information Act and found as much as Rs. 1,055 crore was unused in this fund.
It accuses BSE of “rampant and continuous misuse of powers” and of a “nonchalant attitude” from SEBI.
When a question about such practices was raised in a recent conference, SEBI Chairman Mr. U K Sinha had said, promoters and companies doing such “asset stripping” would be dealt with in an appropriate manner."
BSE officials declined comment, when asked.
Mr. Ajay Veer Singh said, ''The entire compulsory delisting process was skewed in favour of errant promoters. If a promoter wants to shut the company and not pay the shareholder, all he has to do is stop paying the listing fees. The exchange will suspend the company. This is exactly what they want. The flawed system, instead of penalising the company / promoter, lets them off easily while the investor is left carrying the can".
The petition says. “Instead of compelling these errant listed companies to make adequate disclosure, the exchange is providing an easy way out for these errant listed companies by suspending the trading of stock/shares... after the promoters of errant companies siphon off all public money with them and vanish altogether, no steps or actions are ever initiated to trace these companies,”
Src: ET
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