Greenfield companies, which raise funds from the capital market through initial public offering (IPO), will now be placed in a new category styled Group G.

The new group will bring an end to a long controversy over placement of greenfield companies in the existing A, B and Z boards.

Sources said the SEC on Tuesday directed both the stock exchanges to introduce the new board to give clear indication to investors regarding the status of the companies.

The group criteria are similar to the existing B group with the difference in its trade settlement procedure. "The investors trading in the stocks under the G group will not enjoy the netting settlement sys-

tem," an SEC official said.

Under the present rule, a company offering at least 10 per cent dividend are placed in group A. These companies also require holding their annual general meetings regularly and are allowed day netting facility in settlement system.

While companies that are regular in holding AGMs and declare less than ten per cent dividend are placed in group B. Under the existing provision, investors trading in shares of both A and B groups enjoy the benefit of netting settlement system. Under this system, shares are bought and sold electronically and the balances are settled by depositing the scrips and money at the end of the day.

The Z group comprise shares of companies which have failed to hold the current AGMs, or failed to

declare any dividend, or are not in operation continuously for more than six months and whose accumulated loss after adjustment of reserve is negative and exceeds its paid-up capital.

With the aim to discouraging investment in the group, the shares of Z group do not enjoy the benefits of the netting system and settlements are made under trade-for-trade system directly between the buyer and the seller within a day of trading.

Under trade-for-trade system, a buyer is not allowed to transact on a 'day netting' basis. The investor rather needs to deposit the full amount with the broker before purchasing shares. In case of selling such scrips, the buyer is required to deposit the shares first.