The Hindu Business Line : Few cos yet to fall in line with `interim' fiat

DSE officials said that there was little that could be done because going by the letter of the law, these companies could pay a fine of Rs 1,000 each and escape.

NEW DELHI, March 17

ALTHOUGH several big-listed corporates have backed out from their earlier move to pay an interim dividend before March 31 bowing to a directive from the Securities and Exchange Board of India, a clutch of small companies seem set to defy the SEBI order.

On the Delhi Stock Exchange alone there are five such companies which are yet to withdraw their proposals to pay interim dividend to their shareholders.

The corresponding number on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) is several times higher, according to exchange officials; but the exact number could not be ascertained.

When corporates sought exemption from the stock exchanges on the mandatory 30-day notice period for fixing a record date for payment of interim dividend, shortly after the Budget, the Government told SEBI not to condone the relaxation.

The aim of these corporates was to pay the dividend before March 31 and thus escape the dividend distribution tax at the hands of the recipient with effect from April 1.

The five companies which till Saturday had not informed the DSE about the withdrawal of their interim dividend plans are Jindal Drilling and Maharashtra Seamless (both of which had fixed their record dates for March 23), Delton Cable and Selan Exploration (record date March 26) and Samtel Colour (record date March 30).

This move has put the stock exchange administration in a fix. While the Government, through SEBI, has asked stock exchanges not to relax the mandatory 30-day notice period for fixing the record date, the exchanges are unable to take any stringent measure against the companies that refuse to comply.

Stock exchange officials said that there was little that could be done because going by the letter of the law these companies could pay a fine of Rs 1,000 each and escape.

Although the stock exchanges are empowered to either suspend trading in these company scrips or to delist them, they rarely resort to such a measure given the low turnover now in the regional exchanges and their considerable dependence on income from listing fees.

According to a senior DSE functionary, the exchange can at best suspend trading in those scrips.

"What will happen then? Next year, the suspended companies will not pay listing fees. In 1999, our daily turnover was to the tune of Rs 700 crore to Rs 800 crore which has come to less than Rs 10 crore these days," he said.

According to the DSE President, Mr Vijay Bhusan, who is also the Chairman of the Federation of Indian Stock Exchanges (FISE), now that there is a clear instruction from SEBI, non-compliance will tantamount to a cognisable offence and the exchanges can prosecute the companies.

"It seems that all of them will fall in line finally," he said.

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Few cos yet to fall in line with `interim' fiat