AMITY UNIVERSITY RAJASTHAN
L.L.M 1ST SEMESTER
(AMITY LAW SCHOOL)
D-LISTING OF SECURITIES
SUBMITTED TO SUBMITTED BY Mr. RAHUL MISHRA PANKAJ DASHORA
D-listing of securities
Introduction - The removal of a listed security from the exchange on which it trades. Stock is removed from an exchange because the company, for which the stock is issued, whether voluntarily or involuntarily, is not in compliance with the listing requirements of the exchange. Meaning and concept - The reasons for delisting include violating regulations and/or failing to meet financial specifications set out by the stock exchange. Companies that are delisted are not necessarily bankrupt, and may continue trading over the counter. In order for a stock to be traded on an exchange, the company that issues the stock must meet the listing requirements set out by the exchange. Listing requirements include minimum share prices, certain financial ratios, minimum sales levels, and so on. If listing requirements are not met by a company, the exchange that lists the company's stock will probably issue a warning of non-compliance to the company. If the company's failure to meet listing requirements continues, the exchange may delist the company's stock. Important Definitions
“Securities and Exchange Board of India (Delisting of Securities) Guidelines 2003” has been issued under section 11(1) of SEBI Act, 1992, with the objective to protect the interest of investors in the securities market. Sec 3 (1)
(e) ‘delisting exchange’ means the exchange from which the securities of the company are proposed to be delisted in accordance with these Guidelines; (f) ‘exchange’ means any stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956; (g) ‘promoter’ means a person who is desirous of getting the securities of the company delisted under these Guidelines; (j) ‘voluntary delisting’ means delisting of securities of a body corporate voluntarily by a promoter or an acquirer or any other person other than the stock exchange(s).
4.1 These guidelines shall be applicable to delisting of securities of companies and specifically shall apply to: a. Voluntary delisting being sought by the promoters of a company b. any acquisition of shares of the company (either by a promoter or by any other person) or scheme or arrangement, by whatever name referred to, consequent to which the public shareholding falls below the minimum limit specified in the listing conditions or listing agreement that may result in delisting of securities; c. Promoters of the companies who voluntarily seek to delist their securities from all or some of the stock exchanges;. d. Cases where a person in control of the management is seeking to consolidate his holdings in a company, in a manner which would result in the public shareholding in the company falling below the limit specified in the listing conditions or in the listing agreement that may have the effect of company being delisted; e. companies which may be compulsorily delisted by the stock exchanges; 4.2 Provided that company shall not be permitted to use the buy-back provision to delist its securities.
DELISTING OF SECURITIES (VOLUNTARY) OF A LISTED COMPANY
5.1 A company may delist from stock exchange where its securities are listed. Provided that the securities of the company have been listed for a minimum period of 3 years on any stock exchange. Provided further that an exit opportunity has been given to the investors for the purpose of which an exit price shall be determined in accordance with the “book building process” described in clauses 7-10 and 13 and 14 of these guidelines. 5.2 An exit opportunity need not be given in cases where...
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