The National Stock Exchange of India (NSE) has agreed to withdraw its directorate from Computer Age Management Services Ltd (CAMS) and to divest 12.5 per cent of its 37 per cent stake in the proposed initial public offering (IPO) of CAMS following a Securities and Exchange Board (SEBI) directive, in compliance with the NSE’s annual report for FY20. Then NSE will exit from CAMS.
This fiscal year CAMS is expected to launch its IPO (Initial Public Offering). The NSE and Warburg Pincus LLC-backed company had earned Sebi’s approval for its draft prospectus in July and hope to raise some 1,500 crores. At the IPO, current shareholders will sell 12 million shares, of which NSE will keep about 6 million shares, while Warburg Pincus will unload 4 million shares.
The NSE had received a letter from Sebi on 4 February stating that, through its wholly-owned subsidiary NSE Investments Ltd (NSEI), formerly NSE Strategic Investment Corporation, it did not seek permission from the market regulator to acquire a stake in CAMS in 2013. This was more than the Stock Exchange and Clearing Company Regulations (SECC).
Sebi instituted action against the exchange for breaching the SECC Regulations while investing. It noted that NSE was engaged in activities that were unrelated or not incidental to its operation as a stock exchange, without creating a separate legal entity and without a nod from the regulator for investing.
Sebi had instructed NSE to divest all of its stake in CAMS within one year, remove its management from CAMS and not exercise voting rights or take advantage of corporate shareholding benefits.
NSE removed its candidate directors from CAMS after this. NSEI agreed to bid a 12.5 per cent stake in CAMS in its proposed IPO during the year under review. The company is looking to divest its remaining interest in CAMS as well as in the annual report it said.
NSE, which has a 37% stake in CAMS, had to sell the entire stake before the IPO, otherwise, the stock would be locked in at least one year after the IPO.
Meanwhile, NSE also said it received a showcase notice from Sebi in October and a supplementary notice from Sebi in December.
The notices related to some alleged irregularities in the appointment of Chief Strategic Advisor and his re-appointment as Group Operating Officer and Managing Director Advisor (MD) by former Exchange Managing MD and CEO. It also concerned the sharing by a former MD and CEO of certain internal information relating to NSE with an alleged third party.
