Delhi High Court Dismisses Challenge to SEBI's Green Light for NSE IPO

The Delhi High Court has dismissed a petition challenging the no objection certificate granted by the Securities and Exchange Board of India to the National Stock Exchange for its initial public offering, removing a legal hurdle in the exchange’s listing process, as per news reports. 

Court Dismisses Challenge to SEBI NOC for NSE IPO 

On Monday, Justice Jasmeet Singh declined to entertain a writ petition filed by former judicial officer K C Aggarwal. The plea questioned SEBI’s January 30 communication permitting NSE to restart its IPO process, nearly 10 years after its initial attempt in October 2016. 

The court observed that the petition appeared to have been filed to stall the IPO of the country’s largest stock exchange. With the dismissal, NSE can proceed with preparatory steps for its proposed public issue. 

Details of the Petition and Allegations 

The petitioner challenged SEBI’s corporate action adjustment framework, which aims to maintain economic neutrality in derivatives contracts during events such as bonus issues, stock splits and special dividends.  

He alleged that NSE adjusted only contract prices without modifying quantities and debited dividend equivalent amounts from derivatives traders’ accounts. 

The plea argued that dividends accrue solely to shareholders under the Securities Contracts Regulation Act and that recoveries from derivatives participants lacked statutory backing.  

It also stated that representations were disposed of without a hearing and that requests under the Right to Information Act were rejected. 

Background of NSE IPO and Governance Issues 

NSE first filed draft IPO papers in October 2016. The process was stalled due to governance concerns, including the co location case involving preferential server access and issues related to technology systems and internal controls. 

Over the past 1 year, several matters were addressed before the Securities Appellate Tribunal or through settlements. NSE has filed 2 settlement applications with SEBI in the co location and dark fibre cases and made provisions of around ₹1,300 crore. 

Read More: NSE IPO Share Sale: Temasek, LIC and SBI Prepare to Offload Stakes! 

IPO Structure and Recent Developments 

The proposed IPO will be a pure offer for sale, with no fresh issue of shares. Following SEBI’s approval, NSE reconstituted its IPO committee and appointed Rothschild and Co as an independent adviser. 

Conclusion 

The dismissal of the petition removes a judicial challenge to SEBI’s approval for NSE’s IPO. With regulatory clearance in place and committee preparations underway, the exchange can continue procedural steps towards its long pending listing. 

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