SEBI plans to remove inactive companies from stock market listings
What's the story
The Securities and Exchange Board of India (SEBI) is planning to delist companies that have no economic activity from stock exchanges. SEBI chairman Tuhin Kanta Pandey said these firms pose a potential risk to investors. "They pose a potential danger to investors, and therefore, it is necessary to remove them from the listed space," he said at an event on Saturday.
Market integrity
Presence of inactive companies is a matter of market integrity
Pandey stressed that the presence of inactive companies is a matter of market integrity.
Their continued listing could expose more investors to potential risks through social media groups promoting dubious stocks.
He said some manipulators use these stocks in "pump and dump operations."
To combat this, SEBI is using AI tools to identify and scrutinize suspicious accounts, among other measures.
Information
Proposed changes on SME listing platform
On the small and medium enterprises (SME) listing platform, Pandey said SEBI has proposed series of changes through a consultation paper. The aim is to strengthen the existing framework. However, he admitted that some older companies on this platform are still a cause for concern.
Regulatory relaxations
Relaxations for foreign portfolio investors
On foreign portfolio investors (FPIs), Pandey said SEBI will soon issue another consultation paper proposing relaxations in certain regulatory requirements. This includes disclosures and concentration limits.
The paper is likely to be released in the coming weeks.
He also noted that FPIs operate across international markets and evaluate investment opportunities based on post-tax returns in dollar terms.