The Vadodara Stock Exchange (VSE), the only regional exchange in the country that has failed to initiate voluntary closure as per the Securities and Exchange Board of India (SEBI) regulations, has been given another deadline of August 21 to comply or face “heavy penalty.” The move has been effected on exchanges that fail to meet certain criteria set by the market regulator.
The VSE is the only one of 16 such RSEs in the country that has failed to comply with the SEBI deadline to exit. In 2012, the SEBI had issued a circular that exchanges that failed to meet the criteria of Rs 100 crore minimum net worth and Rs 1,000 crore volumes should stop functioning by May 2014.
A delegation of the shareholders of the VSE had recently met the SEBI officials in Mumbai to sort out the deadlock created due to differences between the two groups of equity shareholders represented by brokers and investors, both holding 47 per cent shares each in the VSE. Sources said that the investors and brokers of the VSE were up against each other on issues pertaining to the office space of the Fortune Tower situated in Sayajjigunj and shares of the VSE Services Limited, a wholly-owned subsidiary of the VSE which is not likely to be sorted out any time soon. The SEBI has threatened a penalty equivalent to 20 per cent of total asset of the exchange.
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“We have been given August 21 deadline to present exit route plan or else face penalty if we fail to close the exchange voluntarily. The benefits and concessions that will come from voluntary exit option will all be lost,” VSE MD Someshwar Rao said.
The SEBI will give another few days to the VSE board to formulate exit route in case the brokers and investors manage to come to mutual understanding by August 21 and show their mutual willingness to exit voluntarily.
“The VSE building was constructed from the contribution made by the brokers of the VSE in 1994, and as per an agreement with the management, we are entitled to relocation in case the VSE closes down, and that too after we agree on a relocation plan. So far, the management has not offered any plan to us in the form of legal agreement even though they have assured us the same verbally. Also, 49 per cent share of the subsidiary, VSSL, at the rate of Rs 14 per share to brokers as agreed upon after SEBI green signal has not yet been offered to us,” president of brokers’ forum, Vishnu Patel said. There are 300 brokers of which 80 are active.