SEBI Working to Delist Companies With No Economic Activity to Protect Investors

The Securities and Exchange Board of India (SEBI) is working towards removing companies with no economic activity from stock exchanges, citing the potential risks their continued listing poses to investors, Chairman Tuhin Kanta Pandey said on Saturday.Speaking at a programme in Kolkata, Pandey said several companies remained listed despite having no economic activity, making them vulnerable to misuse by market manipulators.

“They pose a potential danger to investors, and therefore, it is necessary to remove them from the listed space. We are making efforts towards their delisting,” he said.He stressed that addressing the presence of such companies was important for maintaining market integrity, as their continued listing could expose more investors to risks, particularly through social media groups.

According to Pandey, certain operators use these stocks for pump-and-dump operations, misleading retail investors and exposing them to potential financial losses.To tackle such practices, SEBI is deploying artificial intelligence (AI)-based techniques to track and scrutinise suspicious accounts, alongside several other measures aimed at strengthening investor protection.

On the small and medium enterprises (SME) listing segment, Pandey said the regulator had proposed several changes through a consultation paper to improve the existing framework. However, he acknowledged that some older companies in the segment remained a concern.

Commenting on foreign portfolio investors (FPIs), the SEBI chief said the regulator would soon release another consultation paper proposing relaxations in certain regulatory requirements, particularly concerning disclosure norms and concentration limits.The paper is expected to be issued in the coming weeks, he said.

Pandey noted that FPI investment decisions were influenced by post-tax returns in dollar terms, corporate earnings prospects, emerging sectors, currency movements, US Federal Reserve interest rates and global bond yields.

He added that SEBI was working to make the Indian market more accessible for foreign investors by simplifying procedures related to their onboarding and continued operations.