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SCHEDULE - III - NORMS AND PROCEDURE FOR DELISTING OF SECURITIES BY THE STOCK EXCHANGES - SEBI (Delisting of Securities) Guidelines, 2003Extract SCHEDULE III (GUIDELINE 17.1] NORMS AND PROCEDURE FOR DELISTING OF SECURITIES BY THE STOCK EXCHANGES A NORMS 1. The percentage of equity capital (floating stock) in the hands of public investors. This may be seen with reference to --- Existing paid-up equity capital Market lot Share price very high, medium, low Market Capitalisation SEBIs Takeover Regulations-Regulation 21(3) Clause 40A of the Listing Agreement 2. The minimum trading level of shares of a company on the exchanges. There should be some liquidity in every trading cycle. There should be some volume of trading for price discovery on the market. The Company should appoint market makers. Criteria of no-trading may be considered. 3. Financial aspect/Business aspects a) The company should generate reasonable revenue/income/profits. It should be operational/working. It must demonstrate earning power through its financial results, profits, reserves, dividend payout for last 2/3 years. b) If there is hardly any public interest in the securities the company then it is for consideration whether its listed company label needs to be retained any more. c) The company should have some tangible asset. It is for consideration as to what value of assets the company should own in order to be listed continuously listed. 4. Track records of compliance of the Listing Agreement requirements for the past three years. Submission of audited/unaudited results, annual report, other documents required to be furnished to the Exchange, Book closure Record date with due notice Payment of listing fee Service to investors especially with regard to timely return of shares duly transferred, timely payment of dividend, communication of price sensitive information, etc. Failure to observe good accounting practises in reporting earnings and financial position Publishing half yearly unaudited/audited results Frequent changes in Accounting year, Share transfer agent, Registered office, Name. 5. Promoters Directors track record especially with regard to insider trading, manipulation of share prices, unfair market practises (e.g. returning of share transfer documents under objection on frivolous grounds with a view to creating scarcity of floating stock, in the market causing unjust aberrations in the share prices, auctions, close-out, etc. (Depending upon the trading position of directors or the firms). 6. If whereabouts of the company, its promoters directors are not available and even the letters sent by the Exchange return undelivered and the company fails top remain in touch with the Exchange. 7. The company has become sick and unable to meet current debt obligations or to adequately finance operations, or has not paid interest on debentures for the last 2- 3 years, or has become defunct,or there are no employees, or liquidator appointed, etc. 8. On the basis of the above norms and other relevant information available about the company, its promoters/directors, project, litigations, etc., a profile of the company should be prepared and then a decision on delisting should be taken by an Exchange. B PROCEDURE 1. The decision on delisting should be taken by a panel to be constituted by the Exchange comprising the following : a. Two directors/officers of the Exchange (one director to be a public representative) b. One representative of the investors c. One representative from the Central Government (Department of Company Affairs)/ Regional Director / Registrar of Companies d. Executive Director / Secretary of the Exchange 2. Due notice of delisting and intimation to the company as well as other Stock Exchanges where the company s securities are listed to be given. 3. Notice of termination of the Listing Agreement to be given. 4. An appeal against the order of compulsory delisting may be made to the SEBI.
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