At least 26 corporate proposals are stuck for want of clarity on the amendments to Clause 24 of the listing agreements of the stock exchanges.
The amendments, made in May this year, have created some animus between the bourses and the market regulator, the Securities and Exchange Board of India.
The exchanges say the regulator has cast too heavy a responsibility on them when, in fact, they do not have the expertise to execute the mandate given by the markets regulator.
These 26 cases include some high-profile companies such as Nicholas Piramal and Excel Industries.
The amendments, among other things, say that all "schemes of arrangement" involving mergers, demergers, amalgamations and such other changes in the structure of companies, must necessarily be accompanied by a no-objection certificate from the exchanges where the stock is listed.
In conferring the approval, the exchanges have to ensure that all securities laws have been complied with.
The amended clause reads "The company agrees that it shall file any scheme/petition proposed to be filed before any court or tribunal under sections 391, 394 and 101 of the Companies Act, 1956, with the stock exchange, for approval, at least a month before it is presented to the court or tribunal," and "The company agrees to ensure that any scheme of arrangement/amalgamation/merger/reconstruction/reduction of capital, etc, to be presented to any court or tribunal does not in any way violate, override or circumscribe the provisions of securities laws or the stock exchange requirements."
Market sources said Sebi had asked for these amendments to prevent any more cases of companies approaching the courts directly without the concurrence of the stock exchanges.
In one such recent case, a company obtained court approval for the demerger of one of its divisions, something that had been resisted by small shareholders. The market regulator too sided with the shareholders in a case filed in the Bombay high court. The matter is still sub-judice.
Sources at the National Stock Exchange indicated that they had written to Sebi asking for operational clarifications on the guidelines. The exchange has also asked for more information on the documents to be submitted by various companies.
In a faxed reply, the Bombay Stock Exchange said, "We have been vetting the documents as per our rules, bye-laws and regulations, the listing agreement and Sebi's Depositor Investor Protection guidelines."
It added that no application "which has complied with the formalities has been held up." BSE officials also added that the exchange had not told Sebi that it did not have the necessary expertise.
Prior to this, there was no need for the companies to obtain stock exchange approval.