The government is likely to come up with “incentives” for companies that go public. At present several companies, which have a turnover and profits, are not listed.
The Ministry of Corporate Affairs is also set to examine the reasons that have kept these firms away from the stock market.
“We would study as to why companies are not listing, what are the deterrents and then take steps to remove those,” corporate affairs minister Salman Khurshid told Hindustan Times. “We would put in correctives as and where it is required.”
Cost of compliance is one area that the government would look into. The level of compliance — filing statement with regulators and the legal back up to ensure it — is stringent for those listed on the stock exchange. This pushes the cost of listing up.
“Often companies have found it a huge deterrent and have refrained from listing,” Khurshid said. “This is an area which would be looked into in detail to see if any correctives can be introduced.”
“The procedural and legal issues are extremely elaborate and stringent,” said Ved Jain, former president, Institute of Chartered Accountants of India. “That apart, the issue relating to compliance also needs to be looked into to reduce costs and encourage firms to go public.”
The government is also looking at separate listing norms for small and medium enterprises.