CASELECT 1: 'R' Limited is a real estate company which was formed in 1950. In about 56 years of its existence the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact that the Indian economy is on the rise. The incomes of middle class are rising. More people can afford to buy homes for themselves due to easy availability of loans and accompanying tax concessions. To expand its business in India and abroad the company is weighing various options to raise money through equity offerings in India: Whether to tap equity or debt. Market, whether to raise money from domestic market or international market or combination of both, whether to raise the necessary finance from money market or capital market, It is also planning to list itself in New York Stock Exchange to raise money through ADR's. To make its offerings attractive it is planning to offer host of financial plans products to its stakeholders and investors and also expand it's listing at NSE after complying with the regulations of SEBI.
(a) What benefits will the company derive from listing at NSE?
(b) What are the regulations of SEBI that the company must comply with?
(c) How does the SEBI exercise control over 'R' Limited in the interest of investors?
(a) The benefits the company can derive from listing at NSE are:
(i) NSE provides nationwide trading facility for all types of facilities.
(ii) There will be fair and transparent system in trading.
(iii) The NSE network is used to disseminate information and company announcements across the country.
(iv) Enabling shorter settlement cycles.
(b) The regulations of the SEBI for that the company must comply with are:
(i) File necessary documents passed at AGM for issue of securities.
(ii) File credit rating by credit rating agencies.
(iii) File letter issued by depositories with code giving details of securities.
(c) SEBI will exercise control over 'R' Limited by:
(i) Prohibiting fraudulent and unfair trade practices in the securities market unfair trade practices include price rigging, making misleading statements.
(ii) Prohibiting insider trading i.e., restricts the persons having access to price sensitive information about the company to take undue advantage of it.