The Securities and Exchange Board of India (“SEBI”) had, through its circular dated May 30, 2012 (“Exit Circular”), notified exit option guidelines for stock exchanges that were not able to achieve among other things, a prescribed turnover of `10,000,000,000 (Indian Rupees Ten Billion) on a continuous basis on or before May 30, 2014 (“Cut-off Date”). These stock exchanges have been classified as “derecognised/ non-operational stock exchanges” and are not permitted to conduct business relating to securities exchange (“Non-compliant exchanges”). Pursuant to the Exit Circular, SEBI mandated companies that were exclusively listed on Non-compliant exchanges to either delist themselves from Non-compliant exchanges or obtain listing with recognised nationwide stock exchanges before the Cut-off Date, failing which such companies would no longer be a listed company and will be moved to the dissemination board by the exiting stock exchange.

SEBI had received representation from various exclusively listed companies that although they are interested and eligible to migrate to the main boards of nationwide stock exchanges, due to paucity of time they have not been in a position to opt for the same. In light of this and to protect the interests of investors in securities, SEBI by its circular dated April 17, 2015 (“Extension Circular”) granted an extension of 18 (eighteen) months to such exclusively listed companies for listing their securities on nationwide stock exchanges. The Extension Circular clarified that until such listing of exclusively listed companies, these companies shall continue to remain in the dissemination boards of the nationwide stock exchanges.

Summarised below are the conditions that the exclusively listed companies are required to comply with to obtain listing with the nationwide stock exchange in addition to the listing requirements of the nationwide stock exchange:

  1. Only the securities that were already listed by such companies in the Non-compliant exchanges will be permitted to be listed in the nationwide stock exchange. The shareholding pattern shall not be varied materially resulting in a change of control of such companies at the time of listing with the nationwide stock exchange;
  2. Such exclusively listed companies that have filed returns for the past 2 (two) financial years with their respective Registrar of Companies (“ROC”) may be considered compliant and will not be required to submit a “Non- Objection Certificate” or any other document earlier required from the Noncompliant exchanges, to the nationwide stock exchanges in order to be removed from the dissemination board of the Non-compliant exchanges and be added to the main board nationwide stock exchange. To obtain listing on nationwide stock exchange, such companies will have to submit compliance certification from any independentprofessionals, while the nationwide stock exchanges will also carry out independent verification for ensuring the compliance of the requirements.
  3. Promoters and directors that fail to list their companies on trading platforms of nationwide stock exchanges or provide exit options to its shareholders even after the expiry of the extended period will be subject to stricter scrutiny for any future association with the securities market.
  4. Dedicated cells are to be incorporated by nationwide stock exchanges to process applications from such companies and such applications will have to be disposed of at the earliest and not later than 2 (two) months from the date of the receipt of the application.

An exclusively listed company which has been referred as a vanishing company to the ROC by a Non-compliant exchange and so identified by the ROC, its name may be removed from the dissemination board of the Non-compliant exchange.

The extension provided by SEBI to exclusively listed companies who are desirous of listing their securities on trading platform of nationwide stock exchanges, is keeping in mind the investors’ interest and protection thereof. The Extension Circular also serves as a warning to companies that may fail to delist within the time period provided.