BSE SME Exchange awaits final SEBI nod to start operations

“SEBI had given its in-principle approval to BSE to launch the BSE SME Exchange, but since the last three months we have been awaiting the final nod from the regulator to start operations,” BSE SME Exchange CEO Lakshman Gugulothu said

Ahmedabad: The BSE SME Exchange has been awaiting final nod of the market regulator Securities and Exchange Board of India (SEBI) for launch for the last three months, reports PTI.

“SEBI had given its in-principle approval to BSE to launch the BSE SME Exchange, but since the last three months we have been awaiting the final nod from the regulator to start operations,” BSE SME Exchange chief executive officer Lakshman Gugulothu said here.

He was speaking at a seminar on ‘SME Exchange: A Platform for Equity Finance for Small & Medium Enterprises’, organised by Gujarat Chamber of Commerce and Industry (GCCI).

“BSE is leveraging the existing equity platform—BOLT system—for launching the SME exchange. This will be an integrated exchange having provision for migration from BSE SME Exchange to main board and vice-versa,” he said.

“There are around 26 million SME units in the country out of which over one million have the potential to get listed on this exchange. Initially, our target would be to reach out to one lakh SMEs in a focused manner,” Mr Gugulothu said.

“SMEs with a paid up capital of up to Rs10 crore can come on the SME Exchange,” he added.

The advantage of getting listed on this exchange shall be that no SEBI approval is required to bring out an IPO.

However, some exchange guidelines will have to be followed on it, Mr Gugulothu said.

“Even the three years of profit making is not mandatory for a company to get listed on the exchange,” he said.

According to BSE, micro, small and medium enterprises (MSMEs) contribute 8% to the nation’s gross domestic product (GDP), 45% to the manufactured output and 40% to exports. It provides employment to about six crore people through 2.6 crore enterprises.

“The trading on this platform shall be done in lots instead of individual shares,” Mr Gugulothu said.

Speaking on eligibility criteria for companies, he said “At least 50 investors are needed at the time of the IPO and each investor should invest at least Rs1 lakh. The post-issue paid-up capital can be as less as Rs50 lakh."

However, grading of the IPO shall be mandatory and clause 49, which mandates 50% of the directors to be independent directors on a company’s board, shall be applicable, he said.

Speaking on the occasion Gujarat minister of state for industry Saurabh Patel said, “14% of the country’s SMEs are in Gujarat so we are concerned about them. The state government could play the role of a catalyst in promoting such (SME exchange) an initiative.”

“Nearly Rs3 lakh crore are deposited in the banks of the state annually, but very meagre amount is used to finance the state-based companies,” Mr Patel added.

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SAT retains order allowing PriceWaterhouse to cross-examine members

Upholding the contention, the SAT order stated that not allowing cross-examination of witnesses whose statements are being relied upon is a violation of principles of natural justice

Mumbai: In a set back to capital market regulator Securities and Exchange Board of India (SEBI), the Securities Appellate Tribunal (SAT) on Tuesday retained its order that allowed PriceWaterhouse (PW) to cross examine the audit firm’s members, who had acted as witnesses in the Satyam fraud case, to come out clean.

SAT had allowed PW to go ahead with the cross examination of its members, a move that was opposed by SEBI which filed the review petition with the tribunal, reports PTI.

SAT said, however, the market regulator could approach the Supreme Court in case it wants a review of the order.

“The points now sought to be raised in the review application may be taken in the appeals, if filed, in the Supreme Court. We find no ground to review our order dated 1 June 2011. Consequently, the application is rejected,” SAT said.

The members include Srinivas Talluri, CH Ravindranath, P Siva Prasad and N Ramu. In an order in December 2010, SEBI had rejected the plea of PW and others to cross examine them.

PW moved SAT against it.

Upholding the contention, the SAT order said, “We are of the view that there has been violation of principles of natural justice in not allowing cross-examination of the witnesses whose statements are being relied upon in the show-cause notice and also in not making available copies of the statements which have been relied upon by the board in issuing the show-cause notice.”

The order pertains to enquiry in the Satyam case, which came to light after the company’s founder B Ramalinga Raju admitted in January 2009 to fudging of books of accounts.

Satyam Computer was later taken over by Tech Mahindra and renamed as Mahindra Satyam.

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Independent directors need to be more ‘independent’: Report

The KPMG-CII report on corporate governance stressed on the true independence of directors and their role in developing an institution and a pool of personnel with diverse skill and improving corporate governance as also take concrete measures to improve their functioning

Mumbai: There is a need for an objective debate within corporate India to make independent directors more effective and truly independent, reports PTI.

“It is important to address the challenges like the true independence (of independent directors), and their role in developing an institution and a pool of personnel with diverse skill sets who can provide exemplary board services and improve corporate governance as also take concrete measures to improve their functioning through a combination of orientation and adequate remuneration,” a KPMG-CII report said.

The report on ‘Corporate governance: Value beyond compliance’, was released by corporate affairs minister Veerappa Moily here today.

Calling for better accountability, the report said, “There is substantial room for improvement in enhancing accountability of the board members.”

It added, “Within many board rooms, the topic of CEO succession is not often discussed. CEO succession planning calls for wider debate and rigorous processes than the ones currently followed, especially in owner-managed businesses.”

The report further said there is a gap between corporate governance standards in the public sector and the private sector.

“PSUs are subjected to varying levels of government interference in their routine functioning, undermining their autonomy,” it said.

“Restrictive and outdated labour laws make laying off employees and closing down businesses difficult. In FY10-11, about a third of the 249 PSUs collectively reported a loss of $3.4 billon,” the report adds.

Noting that investor activism, particularly by institutional investors, has increased after the recent financial crisis, the report stated, “Greater investor scrutiny could bring about substantial improvement in corporate governance. This is an important area where corporate India needs to catch up with the developed world.”

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