Companies that have no business activities — essentially shell companies that got listed just for manipulation — will need to be delisted from the stock exchanges, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said in Mumbai on Wednesday. Pandey was speaking at the Business Standard BFSI Summit 2026 and told Informist on the sidelines that these companies had listed earlier through the small and medium enterprise (SME) platform of the exchanges.
Source: Informist Media
Such listed shell companies give manipulators an opportunity to take them over purely for manipulation, Pandey said, referring to the manipulation SEBI has found in the share prices of some listed SMEs and of mainboard companies that originally came from the SME platform. He said it is important to clear these deadwood companies from the market, and warned that such aberrations also create a regulatory hazard: if SEBI tightens listing regulations to stop them coming in, the tighter rules become toxic for the rest of the companies.
Source: Informist Media
The SME listing and trading framework itself needs to be changed, Pandey said, to provide liquidity and to ensure issuers are not mere shell companies coming to list without any intent to produce goods or services or run genuine operations. SEBI is comprehensively reviewing the listing, trading and compliance rules for SMEs. When the framework was introduced, listing requirements were deliberately kept less onerous for smaller companies, and the trading lot size was kept high — around Rs 2,00,000 to Rs 2,50,000 — to protect retail investors; but that high lot size kept retail investors away and also ended up pushing away liquidity, he indicated.
Source: Informist Media
The market-making framework mandated for secondary-market trading in listed SMEs has not worked and has only added a lot of cost to companies, Pandey said, questioning how the model works when a big chunk of a small issuer's money is picked up by the merchant banker. He said SEBI wants at least around 2,000 companies — out of more than 600,000 SMEs in the country — with good corporate governance standards to come to the public markets to raise money for their businesses, and that the cost of coming to the public market must be manageable. The Hindu BusinessLine also reported SEBI's intent to delist shell companies in the small and mid-cap categories and overhaul the SME IPO framework to improve the liquidity of small stocks.
Source: The Hindu BusinessLine
What happens next: the review will decide how delisting of shell companies is carried out and what replaces the current SME lot-size and market-making arrangements. SEBI has not announced a timeline in these reports. Investors holding SME-platform shares — and genuine small companies planning to list — are the two groups most directly affected by the outcome.