Training and Recruitment info - please reach 040- 4003 2244-47
+91 98 48 01 9915 | | Reach us

Exit Policy for De-recognized/ Non-operational Stock Exchanges

September 24, 2015

I. Introduction

Securities and Exchange Board of India (‘SEBI’) vide its circular no. CIR/MRD/DSA/14/2012 dated 30th May, 2012 has issued revised guidelines in respect of exit option for de-recognized/non-operational stock exchanges.

II. Applicability

The said circular applies to:

  1. Recognized stock exchanges
  2. Stock exchanges that stand de-recognised as on date of the  above circular i.e, 30th May, 2012.
  3. Stock exchanges that have applied for de-recognition/ exit as on the date of the above circular

III. Process of De-recognition and Exit:

  • Stock exchanges whose annual trading turnover on its own platform is less than Rs. 1,000 Crore (Rupees One Thousand Crore) may apply to SEBI for voluntary surrender of recognition and exit, at any time before the expiry of two years from the date of issuance of the above circular. If the stock exchange fails to achieve the said turnover on continuous basis or   does not apply for voluntary surrender of recognition and exit before the expiry of two years from the date of the above circular, SEBI shall proceed with compulsory de-recognition and exit of such stock exchange.
  • The Exiting or de-recognised stock exchange has to inform their respective members regarding its status and confirm whether they are listed on National Stock Exchange of India Limited ( ‘NSEIL’) /Bombay Stock Exchange Limited (‘BSEL’) or any other nationwide stock exchange, or else they will be moved to the Dissemination Board.
  • Subsequently, on receipt of representations from various companies, SEBI vide CIR/MRD/DSA/05/2015 dated 17th April, 2015, has allowed a period of 18 (eighteen) months by which every Exclusively Listed Company  shall either get listed on NSEIL/BSEL or any other nationwide stock exchange. Until such listing, these companies shall continue to remain with  the Dissemination Board of the nationwide exchanges.

IV. Process to be followed by Exclusively Listed Companies (‘ELC’) of Exiting Stock exchanges:

ELCs will have to list on any other Recognized Stock Exchange (‘RSE’). If they fail do so, such ELCs will cease to be a listed company and will be moved to the Dissemination Board (‘DB’) i.e., a mechanism set-up by stock exchanges having nationwide trading terminals.

V. Direct Listing Norms for Exclusively Listed Companies on BSEL:

  • Minimum capital requirement is Rs. One (01) Crore and Net worth Rs. Three (03) Crores.
  • Distributable profits for at least one out of two immediately preceding financial years.
  • Public shareholding should be meeting with the requirements of SCRA, SCRR and Listing Agreement (Clause 40A). If the company is not compliant with clause 40A of the listing agreement at time of applying for direct listing, the company shall submit an undertaking from managing director/ company secretary, that the company shall comply with the clause 40A of the listing agreement as per the extant regulations and timelines stipulated
  • Minimum 500 shareholders.
  • The company must enter into an agreement with both the depositories.
  • Company should have minimum 50% of public shareholding in dematerialised mode and 100% of promoters’ shareholding in demat mode, else company can commence trading ONLY in Trade-for-Trade basis until they so comply.
  • Information memorandum to the extent applicable, as certified by the company secretary/ MD of the Company.
  • Once companies that have approached for listing are denied listing for any reason whatsoever, they may reapply for listing after a minimum period of six months. If rejected a second time, the company would not be eligible to apply again.
  • The company shall submit a confirmation/proof from the de-recognized stock exchange:
    (a). Entire issued capital of the company is listed on the de-recognized stock exchange.
    (b). No investor complaints should be pending against the company (‘NIL’ score in SCORES). (c) The securities proposed to be listed are not under suspension
  • Company shall not have been de-listed at anytime under delisting regulation 2003 /2009
  • The company shall furnish the compliance status with the critical clauses of the listing agreement viz. Clauses 15, 16, 31, 35, 40a, 41, 47, 49, 54 and Sec Audit, filings under SEBI regulations/ circulars, SCRA and SCRR for the last one (01) year. This should also be displayed on the company’s website. The Exchange will also display this information on its website, as is presently being done for all listed companies.
  • Where the company or the promoters or the Directors have been debarred or disciplinary action has been taken against them by SEBI, then a period of at least 3 years should have elapsed since the expiry of the debarment period/disciplinary action.
  • Company should not be under BIFR and no winding up order should have been passed against the company, at the time of application for listing.
  • The company shall have its own website in compliance with Clause 54 of the Listing Agreement.
  • Company should have obtained NIL SCORES authentication from SEBI.
  • Site visit will be mandatorily conducted by Exchange official(s) and report submitted.

VI. Direct Listing Norms for Exclusively Listed Companies on NSEIL:

    1. Paid up Capital & Market Capitalisation
      • The paid-up equity capital of the applicant shall not be less than Rs. Ten (10) Crores  and the market capitalisation of the applicant’s equity shall not be less than Rs. Twenty Five (25) Crores[or]
      • The paid-up equity capital of the applicant shall not be less than Rs. Twenty Five (25) Crores (In case the market capitalisation is less than Rs. Twenty Five (25) Crores, the securities of the company should be traded for at least 25% of the trading days during the last twelve months preceding the date of submission of application by the company on at least one of the stock exchanges where it is traded.)[or]
      • The market capitalisation of the applicant’s equity shall not be less than Rs. Fifty (50) Crores.[or]
      • The applicant Company shall have a net worth of not less than Rs. Fifty (50). Crores in each of the three preceding financial years. The Company shall submit a certificate from the statutory auditors in respect of net worth as stipulated above.
    2. Conditions Precedent to Listing:The applicant shall have adhered to conditions precedent to listing as emerging from inter-alia, Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes.
    3. At least three years track record of either:
      • the applicant seeking listing; or
      • the promoters/promoting company, incorporated in or outside India or

      For this purpose, the applicant or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following:

      • The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).
      • The net worth of the company has not been wiped out by the accumulated losses resulting in a negative net worth.
      • The company has not received any winding up petition admitted by a court.
      • The company / other listed group company has not been in default in payment of listing fees to any stock exchange in the last three years.
    4. The applicant should have been listed on any other recognized Stock Exchange Listed for at least last three years or listed on the exchange having nationwide trading terminals for at least one year with prescribed trading record.
    5. The applicant has paid dividend in at least Two (02) out of the last Three (03) financial years immediately preceding the year in which listing application has been made


The applicant has distributable profits in at least two (02) out of the last three (03) financial years (an auditors certificate must be provided in this regard).


The net worth of the applicant is at least Rs. Fifty (50). Crores.

  1. The applicant desirous of listing its securities should also satisfy the Exchange on the following:(A) No Disciplinary action has been taken by other stock exchanges and regulatory authorities in the past three years(B) Redressal mechanism of Investor grievanceThe points of consideration are:
    • The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances shall be satisfactory.
    • The applicant’s arrangements envisaged are in place for servicing its investor.
    • The applicant, promoters’/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection should be professional ethical and should not be biased against the shareholder..
    • Defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company’s application for listing. The auditor’s certificate shall also be obtained in this regard. In case of defaults in such payments, the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.

    (C )Distribution of shareholding

    The applicant company/promoting company(ies) shareholding pattern on March 31 of preceding three years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements.

    (D) Details of Litigation

    The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, status of litigation during the preceding three years need to be submitted to the exchange.

    (E) Track Record of Director(s) of the Company

    In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes.

    (F) Change in Control of a Company/Utilisation of funds raised from public

    In the event of new promoters taking over listed companies which results in change in management and/or companies utilising the funds raised through public issue for the purposes other than those mentioned in the offer document, such companies shall make additional disclosures (as required by the Exchange) with regard to change in control of a company and utilisation of funds raised from public.

VII. Features of Dissemination Board:

  1. After moving to the DB, a willing buyer and seller will be given an opportunity to disseminate their offers using the services of brokers of stock exchanges hosting dissemination board. This mechanism shall be given wide publicity for the benefit of investors.
  2. Exiting Stock exchanges are required to enter into an agreement with stock exchanges providing nationwide trading terminals and a one-time fee has to be paid as per the agreement.
  3. Exchanges having nationwide trading terminal will not have any listing agreement with ELC. However, information received from such ELC will be disseminated.
  4. The buyers/ sellers are required to register with broker of the exchange where the dissemination board is set up.
  5. No contract note is required to be issued for such transactions.
  6. The exiting Stock Exchange as well as exchange providing dissemination board will give wide publicity about the dissemination board in one leading national daily and one local daily.

VIII. Members of Stock Exchanges to continue trading through Subsidiary

  • The de-recognised stock exchange may provide trading opportunity to their trading members on stock exchanges having nationwide terminals through their subsidiary companies.
  • The MoU mechanism, if any, between a stock exchange not having nationwide trading terminal and a stock exchange having nationwide trading terminal, shall be discontinued and the trading members of erstwhile stock exchanges will gain access to exchanges having nationwide terminals through membership of the existing subsidiary company.

IX. Conclusion:

Once the exiting or de-recognised stock exchange inform their respective members, the members have to confirm whether they are listed on NSEIL/BSEL or any other nationwide stock exchange. If they are listed as so, a period ofeighteen (18) months is given to list either on NSEIL/BSEL or any other nationwide stock exchange.


Disclaimer: The entire contents of this document have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors and the company expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.

  • By admin  gg 0 Comments   
  • Exit Policy


    Leave a Reply

    Your email address will not be published. Required fields are marked *