Return
to Story Page
To print: Select File and then Print from your
browser's menu
Vivek Law
Mumbai, Oct 13: The Securities and Exchange Board of India (Sebi) has decided to extend the deadline for those seven companies which have failed to sign up with the depository on time to allow instituional investors to trade in demat shares from October 15 onwards. These seven companies formed part of the list of 60 securities where institutions were required to trade only in demat shares from Thursday.
In a related development, of these seven companies, two PSUs, IBP and Bharat Electronics, have joined Colgate-Palmolive in signing up with the National Securities Depository Ltd (NSDL). Three others, HMT, Bharat Earth Movers Ltd and Hindustan Zinc have assured the securities watchdog that they would be signing up shortly. There is no fixed deadline set by Bharat Heavy Electricals Ltd (Bhel) yet, which is an index stock and has significant FII and other institutional holding.
However, considering that it takes at least 15 days for a company to dematerialise an investor's shares once they have been lodgedwith the depository participant, there is no way that investors, including institutional, would be able to trade in demat shares of these companies on October 15 considering that those who have signed up, have done so less than a week back. This has prompted the regulator to push back the deadline.
According to market sources, the deadline for these securities to be traded only in demat form by institutions may be pushed back to December 15 when the next list of 125 securities comes into effect. Sebi is expected to make a formal announcement in this regard on Wednesday.
It is learnt that the market regulator has had to take up the issue individually with the chairmen of the concerned PSUs to convince them to sign up with the depository. ``One would have epected the government-owned firms to atleast play a pro-active role in coming forward to the depository considering the thrust that the government has been laying on moving to a demat regime'', said a source at a leading custodian. ``We are totallyconfused about why these companies are dithering on the issue when all the others have moved to the depository fold. Our clients are concerned as they are not being able to dematerialise their holdings,'' the source added.When queried whether any of the institutional clients had lodged a formal complaint with the company or Sebi, the custodial source answered in the negative but said that such a measure was being contemplated.
As per the Depositories Act, a company is bound to give the investor an option of trading in demat or physical shares. This means that if an investor seeks the option to dematerialise shares there is no option for a company but to sign up with the depository and give the investor the demat option.
Sebi is hoping that the companies sign up before the need for investors to complain arises. In the event of the balance companies still not signing up, the regulator would have to take up the matter with the government.
NSDL chief C B Bhave had earlier written to Sebi asking it to takenecessary action on the failure of seven companies including, Colgate-Palmolive and Bharat Heavy Electricals Ltd (Bhel), to sign up with the depository.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------