However, it has increased the lock in on promoter group shareholding to one year after commencement of trading, up from the earlier 6 months. Further, promoters are also barred from selling their shares up to 6 months before the revocation of suspension.
Earlier, BSE had aligned the relisting norms in line with the conditions for fresh listing, which came into effect in July 2011. According to these rules, companies which have remained suspended for over a period of one year had to have a minimum paid up capital of Rs. 10 crore & a minimum net worth of Rs. 50 crore.
Further, it needed a profit making track record. Accordingly, the company should have “distributable profits in terms of Section 205 of the Companies Act, 1956 for at least 3 out of 5 immediately preceding financial years based on audited financial results with the last financial year reporting profit. Provided that extraordinary income shall not be considered for calculating distributable profit. Provided further that latest 3 financial years should comprise a period of at least 12 months.”
According to many investor associations, these conditions made it practically impossible for suspended companies to relist & trade on the bourses again. According to the PIL, over Rs. 1.8 lakh crore was stuck in such suspended firms.
The petition alleged that by making relisting difficult with these conditions, BSE and stock market requlator SEBI were playing into the hands of the promoters. It further alleged that they did not make any efforts to protect the interests of the investors.
BSE, in its submission to the Delhi High Court, said it had reconsidered the norms “suo motu” in the interest of investors even before the petition was filed. The relaxed norms are likely to take effect after the minutes of the board meeting are approved by the board.
Other conditions that do not figure in the new norms submitted by BSE to the court include the minimum requirement of 500 public shareholders and minimum 50% of public shareholding to be in demat shares.
Mr.Ajay Veer Singh, Advocate for Atul Agarwal, who filed the PIL, said: “The change in rules offers a ray of hope for investors. But this is a minor issue, if one looks at the larger issue of inaction on large number of suspended companies. Our goal is that there should not be a single dead share.”
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