SEBI has asked stock exchanges to synchronise their listing dates and trading approvals with each other for fresh shares to check transfer of shares before listing
Mumbai: With an aim to check transfer of shares and other securities issued through public offers and other issues even before listing, market regulator Securities and Exchange Board of India (SEBI) has asked the stock exchanges to synchronise their listing dates and trading approvals with each other for fresh shares, reports PTI.
The move follows a directive from SEBI last month barring the activation of International Securities Identification Number (ISIN) codes of additional securities being issued through follow on public offers (FPOs), rights issue, preferential allotment and bonus issues.
The ISIN is a 12-character alpha-numeric code that uniquely identifies equity, debt or other securities. The ISIN code serves the purpose of uniform identification of securities for their trading and settlement in the market.
In a circular issued on Tuesday, SEBI further widened the scope of such additional shares and said that the directive would apply to any shares or securities being issued through any means and said that such securities would remain frozen till the time final listing or trading permission is granted by the exchange.
“The stock exchanges are advised to provide the details to the depositories whenever final listing or trading permission is given to securities.
“Further, in case of issuance of equity shares by a company, listed on multiple stock exchanges, the concerned stock exchanges shall synchronise their effective dates of listing or trading approvals and intimate the same to depositories in advance,” SEBI said.
After coming across fraudulent transfer of shares being allotted through IPOs even before the actual listing of the companies, SEBI in January 2006 had allowed activation of ISINs only after the commencement of trading on the stock exchanges in case of shares of the companies.
Through its circular last month, SEBI had decided that in case of public offers for debt securities as well, the ISINs shall be activated only on the date of commencement of trading on the stock exchange.
Further, in order to curtail the transfer of additional issue of shares and securities through FPO, rights issue, preferential allotment and bonus issue of the listed company, the depositories would have to keep such securities frozen till final listing or trading permission is granted.
For this, SEBI has asked the depositories to allot such additional securities under a temporary ISIN which shall be kept frozen.