If you like this article then please like us on Facebook so that you can get our updates in future ……….and subscribe to our mailing list ” freely “
When Delisting is required ??
Delisting means to delist from both the recognised stock exchanges if there, means if a company delists from one of the stock exchanges than it would not be regarded as Delisting. Delisting is normally done when the listing fees have become burden to them because there securities are not able to satisfy the purchase sell of the shareholders. Company has an option to sell any class of securities and there is no restriction on class of securities but the company cannot delist by way of buy back of shares, but the types of delisting are mainly two :
Voluntary Delisting :
(i)Definition: When the promoter, or acquirer or person having major control over the company claims for the delisting of the shares, it is known as voluntary delisting which does not constitute any requirement of a law. (ii)When it is required : There may be many reasons behind a delisting of share mainly because of quarrels among the members for any matter, only negligible trading on the stock exchange, mergers, amalgamations, suspension of business, listing fees become burdensome etc. (iii)Conditions for voluntary delisting :
Minimum listing period of 3 yearsDelisting through book building process.
(iv)Formalities :
All members approvalForm filing with ROCBoard approvalAuditors CertificateListing fee arrearsApplication for delisting of sharesIntimation to Stock exchangeTo be mentioned in Directors ReportPurchase priceExit price to the shareholders
Compulsory Delisting :
(i)Definition: When a listed company is compelled by the recognised stock exchange for delisting its securities due to one or more reasons it is referred as Compulsory Delisting. (ii)Reasons for compulsory Delisting:
Reduction in number of shareholders than minimum required under companies actListing fees arrearsInvestors complaints which are not solved in time.Compliance procedures are not fulfilledUnfair trade practices and mal practices
How the Exit price is decided ??
The exit price should be decided in such a manner in which the investors and the shareholders are satisfied about the price they are paid for the exiting the company. There are mainly two methods through which exit price is decided The exit price or the offer price here in this situation would be average of 26 weeks traded price in whichever stock market they are traded and the same price should be before the announcement being made. The exit price or the offer price here would be decided as any of the following :
Earnings per shareHighest price paid by acquirerReturn on net worthBook value of shares
The public announcement of the same is also required that the following named company has been permanently delisted from the stock market and no trading of the same would be done. Recommended Articles
All you want to know about the Delisting of sharesSystematic Investment Plan (SIP)Profit CentreProcedure for Transfer of sharesSEBI OverviewBSE Sensex an Overviewgifting of shares What is listing and its Importance first Step to Enter in Market by A CA Students
