Change of Name by Listed Companies

Posted: 05/07/2011 in Company, SEBI

Change of Name by Listed Companies

Circular No.: CIR/MRD/DP/ 07 /2011 dated, June 16, 2011.

1. Please refer to SEBI Circulars No. SMDRP/Policy/Cir-8/99 dated April 26, 1999 and No. SEBI/MRD/Policy/AT/Cir-20/2004 dated April 30, 2004 on the captioned subject matter.

2. The aforementioned SEBI circular dated April 30, 2004 required all listed companies seeking change of name to comply inter alia with the following provision:

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

3. It is observed from the representations received from few companies and feedback received from the Stock Exchanges that the companies, where the gestation period of the business is usually longer and the revenue stream
often delayed, find it difficult to comply with the aforesaid provision.

4. In view of the above, it is decided to modify the para 2.2 of the aforementioned circular as under:

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

Or

“The amount invested in the new activity/project (Fixed Assets + Advances + Works In Progress) is atleast 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”.

To confirm the compliance of the aforesaid provision 2.2, the company shall submit auditor’s certificate to the exchange.

5. All the Stock Exchanges are advised to:-

5.1. implement the above by making necessary amendments to the bye-laws and Listing Agreement, as applicable;

5.2. to bring the provisions of this circular to the notice of the listed companies and member brokers/ clearing members and also to put up the same on the website for easy access to the investors; and

5.3. communicate to SEBI the status of the implementation of the provisions of this circular and the action taken in this regard in the Monthly Development Report.

6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

This circular is available on SEBI website at http://www.sebi.gov.in.

Click here to download the above Circular- CIR/MRD/DP/ 07 /2011 June 16, 2011.

Circular No.:- SMDRP/POLICY/CIR- 8 /99 dated April 26, 1999
Sub : Amendment to the listing agreement – Clause 32 and Clause 41 related to disclosure of turnover and income from new business subsequent to change in name.

This is in continuance to our circular dated April 07, 1998 pertaining to amendments in the Listing Agreement to incorporate disclosure requirements.

A recent phenomena has been noticed that a large number of companies are changing their names to suggest that they have entered in software/information technology business. It is felt that the investor should have complete disclosures about the new activities of such companies in order to make informed decisions.

The Exchanges are advised to amend Clause 32 and 41 of the Listing Agreement to provide that companies who changed their name suggesting any new line of business (including software business), shall disclose the turnover and income, etc., from such new activities separately in the quarterly/annual results required to be submitted/published in compliance with these clauses. Companies which have changed their names after January 1, 1998 or change the name hereafter, shall make such disclosures and shall continue to make these disclosures for a period of 3 years from the date of change in the name.

The aforesaid amendments shall be made effective from the year/quarter ending March 31, 1999 for annual and quarterly disclosures.

This circular is available on SEBI website at www.sebi.gov.in.

Circular No.:- SEBI/MRD/Policy/AT/Cir-20/2004 dated April 30, 2004Sub: Frequent change of names by listed companies

1. Please refer to SEBI circular No. SMDRP/POLICY/CIR- 8/99 dated April 26, 1999  wherein it has been provided that companies who change their name suggesting any new line of business (including software business), shall disclose the turnover and income, etc., from such new activities separately in the quarterly/annual results required to be submitted/published in compliance with these clauses.  It was further provided that companies which have changed their names after January 1, 1998 or change the name hereafter shall make such disclosures and shall continue to make these disclosures for a period of 3 years from the date of change in the name.

2. In addition to the above provisions, it has now been decided that all listed companies which decide to change their names shall be required to comply with the following conditions:

2.1 A time period of atleast 1 year should have elapsed from the last name change

2.2 Atleast 50% of its total revenue in the preceding 1 year period should have been accounted for by the new activity suggested by the new name

2.3 The new name along with the old name shall be disclosed through the web sites of the respective stock exchange/s where the company is listed and also through the EDIFAR web site for a continuous period of one year, from the date of the last name change.

3. The Stock Exchanges are advised to

3.1 make necessary amendments to the relevant bye-laws, rules, regulations and the listing agreement for the implementation of the above decision immediately.

3.2 Bring the provisions of this circular to the notice of the member brokers/clearing members and listed companies of the Exchange and also to disseminate the same on the website.

3.3 communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of May, 2004.

4. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

This circular is available on SEBI website at www.sebi.gov.in.

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