S.No.

Existing Provisions

New Norms

Implications

Shareholding of Promoters/ Promoters group in Demat mode

1.      

To remain listed in normal segment of the Stock Exchange all listed companies were required to have atleast 50% of its Public Shareholding, to be in Demat mode. 

To remain listed in normal segment of the stock exchange all listed companies will be required to dematerialize 100% of the Promoters and Promoter’s group Shareholding including pledge/ usage as collateral. 

·         Till now, there was no mandatory requirement of Promoters’ holdings to be in Demat mode.

·         Now, in addition to 50% Public holding being in Demat mode, 100% of the Promoters’ holding should be held in Demat mode, including pledge/ usage as collateral.

·         This has to be complied with by the Quarter ended September 2011.

·         In case a Company fails to comply with the same, the trading of such securities shall take place in trade to trade segment.

Change of name of Listed Companies

2.      

A listed company seeking change of name shall comply with the condition that at least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by new name.

A listed company can change its name if it satisfies either of two criteria:-

a.   At least 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by new name;

OR

b. The amount invested in the new activity/ project (Fixed Assests + Advances + Work in progress) is at least 50% of the Assets of the Company.  The Advances shall include only those extended to contractors and suppliers towards execution of project, specific to new activity as reflected in the new name.

·         This new Clause will relieve the Companies, which are engaged in business activities, wherein the gestation period is usually longer and the revenue stream is often delayed.

·         As per the existing norms, a listed Company proposing a name change must make sure that atleast 50% of its total revenues in the preceding 1 year should have been accounted for from the new business activity.

·         Now, with promulgation of new Norms, the Companies will not be required to wait for the earnings from the new business activity for a name change. Now, the same can be proposed on the basis of their Investments in the new activity/ the Project.