Sebi allows listing of cooperative societies

The Securities and Exchange Board of India (Sebi) was gathering legal opinion on the listing of cooperatives.

Any group of individuals can form a cooperative society to act jointly for common benefit. Shares of cooperative societies in India are not offered to the public.

Listing of cooperatives is in practice in the UK, US and Australia. These listed cooperatives are in retail, agriculture and agri-business. The case for listing cooperatives in India made on the performance of dairy cooperatives like Amul and Mother Dairy, which had revenues of $3.5 billion and $1.1 billion, respectively, in 2014-15.

Unlike start-ups and municipal bonds, however, listing of cooperative societies is not easy. A company wanting its securities listed on a stock exchange can apply but cooperatives are incorporated under the Cooperative Societies Act, which is proving to be a hurdle.

“The regulator is consulting legal experts for a way around it.”. Sebi is also discussing the issue with the ministry. Listing of cooperatives will require amendments to the Securities Contract (Regulations) Rules, the Companies Act, and the Sebi Act.

“The regulator will need to approach the legal department of the ministry making a case for listing these securities.”

The majority of cooperative societies that have gone public the world over are marketing cooperatives. Developing and manufacturing consumer products require substantial investments in building and maintaining consumer brands. These investments are not only substantial, they are also risky, thus the need for the public equity route.

profile image

About eMinds Legal

eMinds Legal

eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

Leave a Reply

Your email address will not be published. Required fields are marked *

Corporate Law Referencer

Corporate Law Referencer

Corporate Law Referencer

India’s Leading Compliance Software

India’s Leading Compliance Software

Get A Demo Today !

Recent Articles

Recent Legal updates

Recent Gst Updates