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TMI Blog2020 (2) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Exchange Board of India ("SEBI" for convenience) thereby treating the complaints filed by the appellants on the substantive issues of non-listing of an Exclusively Listed Company ("ELC" for convenience) namely Schneider Electric President Systems Ltd. ("Schneider" for convenience) and valuation of its shares. 2. The 31 appellants who filed this appeal are public shareholders of Schneider, holding around 9% of the company's equity capital. Schneider was listed in the Bangalore Stock Exchange and Pune Stock Exchange which got closed down like many other Regional Stock Exchanges ("RSEs" for convenience). On account of such closure of RSEs SEBI issued a series of Circulars/Guidelines regarding the steps/approach that such companies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of such companies on a priority basis and on a light touch regulation approved by SEBI for listing ELCs including exemptions from the Takeover Code. With regard to providing exit to investors, in case of failure to get the company listed, specific procedure was provided in the Circular dated October 10, 2016 which inter alia states as follows:- "The oversight and monitoring of such exit mechanism shall be carried out by the designated stock exchanges. Designated stock exchanges shall further ensure that the promoters have made adequate efforts in terms of the above provisions for providing exit to their shareholders before removing ELCs from the DB. The designated stock exchange shall display the list of companies willing to provide exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 29, 2017 and followed up with communication dated May 10, 2017 etc. Despite providing detailed evidence relating to the fact that Schneider was not making any effort in getting listed in the nationwide stock exchanges and the valuation of its shares got done by Schneider was without taking all factors into account, instead of carrying out at least an examination, SEBI has treated these representations as just ordinary SCORES complaints like individual investors' complaint such as non-receipt of shares, dividend etc. It was also asserted by the learned counsel that the national level stock exchanges and SEBI have adopted a completely unconcerned approach and directed the appellants to approach the Bangalore Stock Exchange and Pune Stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination board the ELC has been placed. Therefore, the impugned decision communicated by SEBI on September 20, 2017 stating that 'if the complainant has any concern on the valuation, you are advice to take up the matter directly with the company or the stock exchange' is perfectly in order. Moreover, the learned counsel further contended that the appellant has lost the right to agitate now because the said decision was communicated to them earlier on March 17, 2017, which is not challenged. Moreover, the appellant has not given any calculations or data regarding the inadequacy/inaccuracy of valuation done by Schneider. 8. Learned counsel Shri Pulkit Sukhramani, appearing for Respondent No. 2, Schneider, in addition to supporting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the same issued by SEBI on various dates mandate at least a serious endeavour from the side of the company to get listed failing which they have the option of voluntary delisting, failing even which getting compulsorily delisted. That is why SEBI's Circular dated May 30, 2012 elaborately prescribed a light touch approach to eligibility criteria etc. for listing such ELCs and directed the stock exchanges to monitor the progress further. By the October 10, 2016 Circular such ELCs were given exemption from some of the provisions of ICDR for raising capital. Therefore in the light of these directions and its tone and tenor it is clear that listing is the first option and only in the event of failing to get listed an exit option should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a plan of exit, got a valuation done and provided an exit option. No authority seems to have discharged any of their responsibilities including monitoring. 11. Given the importance of investor protection, though we observe certain gaps in the appeal particularly in the way the reliefs have been sought, we set aside the order/communication dated September 20, 2017 passed by SEBI and in the interest of justice we direct SEBI to pass a reasoned order in the matter. The said order shall also address the issue relating to the stand of SEBI on the need for the ELCs to make a serious effort in continued listing and the procedure and monitoring of their endeavour in listing and/or the exit process when failing to get listed. 12. SEBI shall pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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