Tuesday, 9 July 2013

SEBI should put a ban on ‘Retained Earnings’

SEBI (Security and Exchange Board of India) should put a ban on ‘Retained Earnings’, to really make investments meaningful. Investment in shares implies limited partnership thus whole EPS (Earning per share) be distributed to shareholder, profit or loss. It should be exclusively investors’ prerogative to reinvest or not.

Investors don’t consider share with a view to reap benefit or liability of profit or loss. They are solely interested in selling and purchasing shares in market, this makes limited partnership worthless, and that’s what secondary market is all about. I would prefer to call it secondary level brokering than investments or limited partnership.


I feel it’s more important to deal with domestic problems first than to compete with international community. How could one clarify our share markets are solely meant to compete with international markets? I am sure our motives are quiet different we are more concerned about upbringing our people. On basis of words of preamble to Constitution of India; I can be sure enough that our share markets are not meant to benefit solely corporate giants, for them to make millions and billions of worth, but to bring money to ordinary Indians. Ban on ‘Retained Earnings’ is the best solution to change the scenario and benefit ordinary Indians.

I know all these require heavy legislations, but this is not the epitome of problem. Our instinctively static institutions along with corporate bribery from institution’s to legislative level is what the actual problem is all about; why ordinary Indians still remains busy in earning daily breads and corporate giants earn yachts and enjoy exotic holiday every third day, these institutions are fooling Indians who they are actually meant to serve, and blame international ups and downs for public problems, no one talks about how much bribe these static pot belly officers and politicians get from corporate giants to make use of loop holes of laws and benefit their motives by regulations.


Ban on ‘Retained Earnings’ would affect the industries on various fronts, but the motive of the ban is to come heavily on hoardings of millions and billions of worth by corporate giants. We need go through the phase to establish what the Constitution of India aspires. There are a lot of ways out to solve acute immediate effects, provided we are intending to talk the dynamic step.


General investors are fooled by letting them take part in elections and having no say in EPS distribution. If they are limited partners they have sole right to reinvest or not. Ban on ‘Retained Earnings’ will up bring general investors finances, that’s what real partnership is all about and step toward economic equality and justice.
SEBI should ban ‘Retained Earnings’, if not and for sure it will not, than at least open gates and ease hurdles to set up alternate markets where such concept could be practised. If corporate bribery doesn’t come into play such alternate markets where ‘Retained Earnings’ are barred could become reality, making public real partners and not foolish voters; bringing meaningful monetary benefit to general investors.

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