The National Stock Exchange (NSE) has urged the Securities and Exchange Board of India (Sebi) to revisit its stance on allowing the country’s largest bourse to go public.
In an affidavit submitted to the Delhi High Court—which is hearing a writ petition filed by People Activism Forum for expediting NSE’s initial public offer (IPO)—the exchange has stated it has been seven years since it first filed an offer document and more than five years since Sebi returned the application. Hence, a “fresh view” is required given the latest facts and circumstances for listing its securities.
In 2019, Sebi had returned NSE’s draft red herring prospectus (DRHP) filed in December 2016, advising it to make a fresh filing upon resolution of the investigation in the colocation matter (colo).
“It may be noted that complete resolution of all the pending cases may not be feasible at this juncture considering that some of them are already before the Supreme Court. Considering the disclosure regime as stipulated under the Sebi (Listing Obligations and Disclosure Requirements) Regulations, the same shall in any case be a part of the disclosure requirement under the DRHP that may be filed by NSE,” the exchange submitted in an affidavit dated June 19.
Delhi High Court has scheduled the next hearing in the matter on August 14. In an earlier hearing in May, the court had directed NSE and Sebi to submit their replies within four weeks.
NSE has submitted that it has been compliant with all disclosure guidelines laid down by Sebi.
NSE’s IPO has been in a limbo owing to the ongoing litigations and pending cases in several legal forums on matters such as colocation, dark fibre, and governance lapses.
In its submission, NSE said that most of the matters are on the verge of reaching their finality and may not be a reflection of the governance and regulatory norms that it is presently subjected to.
“Instances such as the listing of Vodafone Idea (FPO) and Aadhar Housing Finance securities on the stock exchanges in India somewhere in April-May 2024 may be noted wherein despite the pending litigations having significant bearing on the financial and governance issues of the entities, Sebi gave its approval for publication of RHP based on the disclosure regime,” submitted NSE.
In its petition to the court, People Activism Forum had submitted that there is no hindrance to ‘enlisting of shares of NSE with Sebi’ as the six-month prohibition imposed by the market regulator following the order on the colocation matter expired in October 2019.
NSE has also underscored that rivals BSE and Multi Commodity Exchange (MCX) as well as most big global exchanges such as London Stock Exchange, New York Stock Exchange, and Singapore Stock Exchange “have been listed for long and their shares are freely traded across the globe.”
“Listing brings transparency and efficiency in the overall operations of the entity, with the board and management of a listed company having accountability towards its shareholders. This in turn results in better corporate governance framework being adhered to by listed entities and improves the listed entities’ credibility among institutions and the investing public due to complying with various regulatory norms and ensuring transparency while conducting operations,” NSE has stated.
In the affidavit, the exchange has said its listing will benefit a wider ecosystem. It has said its shareholder base has increased from 2,607 in March 2022 to nearly 15,000 at the end of May 31, 2024, “through which it can be inferred that the shares are traded on a regular basis.” NSE shares are actively traded in the unlisted market. Further, NSE has said nearly 100 million unique investors trade on its platform through 1,300 registered brokers.
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