Listing and Delisting of Securities on the Stock

Exchange

Submitted to:- submitted by:-Miss. Nidhi Prashar Ramandeep Kaur(Assistant prof. In mgt.studies) MBA 3rd A

805

Objective

• To find out the need of getting any securities listed on any stock exchange.

• To understand the various formalities required for listing of securities on a stock exchange.

• To study the procedure of getting any security listed on a stock exchange.

• To know the Requirements and condition of listing• To Know the Reasons for delisting of securities.• To define the Procedure of delisting of securities.• To describe the Effects of listing and delisting.

Listing of securities

• Admission of the securities dealing on a recognized stock exchange.

• Security may be of company, Central or State Government.

• And other financial institutions/corporations, municipalities, etc.

Meaning of Listing

Types of Listing

Important section related to listing

Objective of Listing

• To provide liquidity to securities.• To protect interest of investors by ensuring

full disclosures.

Advantages of Listing

• Opportunity to raise capital.• Helps generate an independent valuation of

the company• Raises a company's public profile• Continuing liquidity to the shareholders• Market perception of their financial and

business strength is enhanced.

Listing Requirements

• Minimum Listing Requirements for New Companies.– Large cap companies

• Minimum post-issue paid-up capital of the applicant company -Rs. 3 crore

• Minimum issue size - 10 crore • Minimum market capitalization of the Company- Rs. 25 crore

– Small cap companies• Minimum post-issue paid-up capital- Rs. 3 crore • Minimum issue size- Rs. 3 crore• Minimum market capitalization- Rs. 5 crore • Minimum income/turnover- Rs. 3 crore in each of the preceding

three 12-months period • Minimum number of public shareholders- 1000.

Listing Requirements(Cont….)

• Minimum Listing Requirements for Companies already listed on Other Stock Exchanges.– Minimum issued and paid up equity capital-Rs. 3

crore– Profit making track record for the preceding last three

years.– Minimum net worth- Rs. 20 crore– Dividend paying track record for at least the last 3

consecutive years.– Company shall have at least two years listing record

with any of the Regional Stock Exchanges

Listing Requirements(Cont….)

• Minimum Requirements for Companies Delisted by seeking Relisting– Required to make a fresh public offer and comply

with the extant guidelines of SEBI

• Permission to Use the Name of the Stock Exchange in an Issuer Company's Prospectus.

Guidelines

Submission of Letter of Application

• As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies

Allotment of Securities As per Listing Agreement, a company is required

to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, approval of the basis of allotment.

Trading Permission

• As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days .

• Company may file appeal if allotment can't proceed

Payment of Listing Fees All companies listed on the Exchange have to

pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time.

Initial listing fee: Rs.20000 Annual listing fee(paid capital up to Rs 5 cr.):

Rs.10000 (Above Rs.5 cr and up to Rs.10 cr):Rs.15000 (Above Rs. 10 cr and up to Rs. 20 cr): Rs.25000

What is delisting?

DELISTING

“Delisting” is totally the reverse of listing. To delist means

permanent removal of securities of a listed company from a

stock exchange. As a consequence of delisting, the securities

of that company would no longer be tradeable at that stock

exchange.

Types of delisting

How to delist ??

Compulsory delisting

• A recognized stock exchange may, by order, delist any

equity shares of a company on any ground prescribed in the

rules made under section 21A of the Securities Contracts

(Regulation) Act, 1956

Voluntary delisting Voluntary delisting :-

VOLUNTARY DELISTING FROM ALL THE EXCHANGES

VOLUNTARY DELISTING FROM FEW EXCHANGES BUT REMAINS

LISTED ON AT LEAST ONE STOCK EXCHANGE HAVING NATION

WIDE TERMINALS

VOLUNTARY DELISTING BY THE SMALL COMPANIES

Voluntary delisting of securities of a listed company

• Conditions for de-listing• Procedure for voluntary de-listing• obtain the prior approval of shareholders by a special

resolution passed at its general meeting.• Make a public announcement • De-listing from one or more stock exchanges• Minimum number of shares to be acquired• De-listing of one or all class of securities

relistingCooling period:-

The company that has voluntarily delisted its securities can relist its

securities only after a period of 5 years.

The company that has been compulsory delisted by the exchange can

relist its securities only after a period of 10 years.

Relisting of sick companies

In case of Delisted companies who were sick in the past, can be given

opportunity of listing through Restructuring scheme passed by BIFR.

The sick companies are exempted from the provision of cooling period.

Sectors involved in delisted companies in 2010

conclusion• There was a time not very long ago when there was no regulating

agency like SEBI. Trading was done then also but then it was a one way route. Every company that issues shares to the public is required to have its shares listed on a recognized stock exchange.

• However, with the changing economic scenario and with the opening up of the Indian economy, the country witnessed huge influx of foreign capital. This resulted in growth in the number of listing of companies on the stock exchanges.

• Moreover, in the present scenario, if the market is studied minutely many MNC seeks to get their shares delisted at the expense of those investor who themselves are worried seeing their hard earned money whooping in number game.