DELISTING OF SECURITIES.
1. What is meant by delisting of securities?
The term "delisting" of securities means
- permanent removal of securities of a listed company from a stock exchange.
- Delisting may be – compulsory
or – voluntary
2. What is the consequence of delisting?
- the securities of that company would no longer be traded at that stock exchange.
3. What is Compulsory delisting?
- It is a penalizing measure at the behest of the stock exchange - for not making submissions/comply with various requirements - set out in the Listing agreement within the time frames prescribed.
4. What is the difference between voluntary delisting?
In voluntary delisting, a listed company decides on its own - to permanently remove its securities from a stock exchange.
5. What is the exit opportunity available for investors in case a company gets delisted?
SEBI (Delisting of Securities) Guidelines, 2003 provide an exit mechanism, whereby - the exit price for voluntary delisting of securities is determined - by the promoter of the concerned company - which desires to get delisted, - in accordance to book building process.
- The offer price has a floor price,
- which is average of 26 weeks average of
- traded price quoted on the stock exchange where
- the shares of the company are most frequently traded
- preceding 26 weeks from the date public announcement is made.
There is no ceiling on the maximum price
None: In case of infrequently traded securities,
- the offer price is as per Regulation 20 (5) of SEBI
(Substantial Acquisition and Takeover) Regulations.
For this purpose, infrequently traded securities is determined in the manner as provided in Regulation 20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations.
6. Does a company listed at BSE/NSE have to provide exit offer to shareholders in case it delists from stock exchanges other than BSE and NSE?
No, the company does not have to provide exit offer to shareholders because it continues to be listed on the BSE / NSE which have nationwide reach and shareholders can exit any time they decide to do so by way of selling shares in NSE/ BSE.
BUY BACK SHARES.
1. What is the manner in which the company can buy back its own shares?
The company can buy back its shares in any of the following manners: i. From the existing shareholders on a proportionate basis through the tender offer;
ii. From open market through:
a. Book building process
b. Stock exchange,
iii. From odd lot holders.
2. Can a company buyback its shares without passing shareholders’ resolution?
Yes. A company may buyback its shares without shareholders’ resolution, to the extent of 10% of its paid up equity capital and reserves.
However, if a company intends to buyback its shares to the extent of 25% of its paid up capital and reserves/ then the same has to be approved by Shareholders Resolution as specified in Section 77-A, of Companies Act, 1956.
3. Where can one get details of companies proposing to buyback their shares?
1. Listed companies are required to intimate the stock exchange of general meetings
and resolutions passed thereof.
Hence, information on companies proposing to buyback shares may be obtained from the stock exchanges.
2. When buyback offer document or public announcement is filed with SEBI,
- SEBI issues a press release and
- the offer document...
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