Mumbai: Sebi is hopeful of taking a call in the next six months on listing of nation's premier bourse BSE after the integration of the capital market watchdog with the commodities regulator Forward Markets Commission (FMC).
“We are hopeful that in about six months from now, we will be able to take a call on listing of BSE after resolving several issues pertaining to the integration of Sebi and the FMC,” Sebi Chairman U K Sinha told reporters on the sidelines of an Indian Merchants' Chamber function here.
Meanwhile, Sinha refused to answer a question on what the Securities and Exchange Board of India (Sebi) is doing on United Spirits-Diageo controversy, wherein the British company wants USL chairman Vijay Malyya to leave the company, saying “I cannot comment on individual cases.”
After the demutualisation process, the country's premier stock exchange sought regulatory permissions for listing on bourses.
In 2012, Sebi had allowed the stock exchanges which have completed over three years of operations to list their own shares through an IPO. Under Sebi guidelines, stock exchanges should have minimum net worth of Rs 100 crore and were given three years to achieve threshold capital base.
Sinha pointed out that since then several other issues have come up. For example, what is going to be exchange space, especially when commodities markets will also come under the ambit of Sebi and those exchange will also technically become security market instruments.
“Since commodity futures are going to be defined as securities, they can also technically demand and be eligible for trading in futures. So there are whole lot of issues, which are still unresolved. But my feeling is that in period of about six months from now, we will be able to take a call,” Sinha said.
“Exchanges in our country today are performing regulatory functions. This includes regulation of brokers and regulation of listed entities...We are trying to evaluate whether we are comfortable with the current arrangement,” Sinha added.
Commenting on the status of the merger between Sebi and FMC, Sinha said, “The Finance Bill in the present forms says the government will provide a date for the merger. In the meantime, Sebi and FMC are working together. We have formed teams and are trying to understand various nuances...the manpower that will be required,” he said.
Sinha said the domestic flow in the markets are positive after a gap of five years. Nearly Rs 71,000 crore net inflow were witnessed in equity markets last year. We need serious reforms in the pension area, which will help domestic funds to invest more in the market.
The real estate investment trusts (REITs) and the Infrastructure Investment Trusts (InvITs) regulations are in place. The government is actively considering clarifying the tax issues around REITs soon, he added.
Sinha also warned corporates to be ready for severe punishments for not appointing women directors. Nealry one-third of listed companies have not yet appointed women directors as of April 1, 2015.
“If they don't comply within extended time-frame of September this year, then Sebi will take action with severe penalty. I hope such situation does not arise,” Sinha warned.
With the Companies Act of 2013 have tightened corporate governance norms by making it mandatory for firms to have at least women director on their board.
This is the second extension that Sebi had given to companies after six months' additional time given last September.
On April 8, Sebi had announced a minimum Rs 50,000 fine on companies not having woman on board and warned of further action, including against promoters and directors, for non-compliance beyond September.
Without naming the companies that failed to appoint at least one woman director within the stipulated deadline of March 31, Sebi announced a four-stage penalty structure wherein fines increase with the passage of time.
Sebi had warned of “serious consequences” for non-compliance, but a large number of companies, including many state-run firms, actually failed to meet the deadline.
The regulator has asked the stock exchanges to levy the fines as the violation relates to the listing agreement.
As a result, the fines would multiply for the companies listed on multiple exchanges.