SEBI fines 2 cos for failing to dematerialise shares

MUMBAI: The market regulator Sebi penalised two companies--

BTW Industries and GR Magnet--for delaying dematerialisation of

securities for several

years.

While it imposed a penalty of Rs 40 lakh on BTW Industries, GR

Magnet was fined Rs 12 lakh for failing to dematerialise its
securities. Dematerialising securities means keeping them in
electronic form.

In the case of BTW, the Sebi said there were 1,860 demat requests
pending from the National Securities Depository (NSDL) and
Central Depository Services (CDSL), involving over 3.30 lakh
shares. These requests have been pending since October 2003. In
the case of GR, it said 624 demat requests have been pending from
January 2004, involving 3.10 lakh shares of this company.

In both the orders, Sebi cited the violation of Sebi rules pertaining
to the Depositories Act.

As per Sebi rules, all securities are to be held in the demat form
and if they are not converted to electronic form within a stipulated
period by the entities, they are penalised.

"...incidences of this nature definitely compromise the securities

market regulatory framework and to the detriment of investors at
large," Sebi said in its orders against these two firms. "Delay and
non-attendance of each demat request constitutes a separate
violation," it added.

A depository is an organisation that holds securities like shares,

debentures, bonds, government securities and mutual funds of
individual investors in electronic form at the request of the
investors through a registered depository participant. It also
provides services related to transactions in securities. At present,
there are two depositories registered with the Sebi -- NSDL and
CDSL.

To avail the services of a depository, an investor is required to

open a beneficial owner account with a depository participant of
any of the two depositories.