Delisting.in
 
Corporate professional Home About Us Know Delisting Delisting Club FAQs Contact Us Login  
 
For Delisting Services, Contact Corporate Professionals Capital Pvt Limited, SEBI Registered Merchant Bankers at 011-40622200
 

 

 

Home / New Delisting Regulation - issues unresolved

New Delisting Regulation - Issues unresolved

The new Delisting Regulations have plugged in many of the unplugged areas of the Delisting Guidelines. But still, there are certain grey areas/ clauses which create a doubt and are not clear in their text. Some of these have been discussed here:

  1. As per Sub cl 2 of Regulation 3, delisting made pursuant to a scheme sanctioned by BIFR or NCLT have been exempt from the Regulations. However, no clarification has been provided in regard to delisting pursuant to a Restructuring Scheme u/s 391/ 394 of the Companies Act.

  2. As per Sub cl 4 of Regulation 4, promoters shall not employ the funds of the Company to finance an Exit Opportunity. Here the question that arises is that the funds of the Public Issue are received by the Company and not by the promoters, and not now if the Company is proposing to get delisted, the funds should also be paid by the Company, so why promoters?

  3. As per Sub cl 4 of Regulation 8, the Exchanges while considering an application seeking in-principle approval for delisting, may require the Company to satisfy it as to:
    (d) the compliance with any condition of the listing agreement with that recognised stock exchange having a material bearing on the interests of its equity shareholders;

    By reading the above provision, its not clear as to what conditions will have a material bearing on the interests of the shareholders. In fact, its suggested that SEBI should itself specify the particular conditions of Listing Agreement need to be complied with. Otherwise, the Companies will still be left to the whims and fancies of the respective exchanges.

  4. As per Sub cl 4 of Regulation 8, the Exchanges while considering an application seeking in-principle approval for delisting, may require the Company to satisfy it as to:
    (e) any litigation or action pending against the company pertaining to its activities in the securities market or any other matter having a material bearing on the interests of its equity shareholders;

    By reading the above provision, its not clear as to what kind of litigations/ actions are being talked about? Further, will the Exchanges wait for the clearance of the litigation or the pending action? Or will the Exchanges accept an Undertaking from the Companies/ their Promoters to abide by the decision of the Authority before which the litigation or action is pending?

  5. As per Sub cl 3 of Regulation 14, any holder of depository receipts issued on the basis of underlying shares held by a custodian and any such custodian shall not be entitled to participate in the offer. Sub cl 4 provides an exception to the above by mentioning that:
    (4) Nothing contained in sub-regulation (3) shall affect the right of any holder of depository receipts to participate in the book building process under sub-regulation (1) if the holder of depository receipts exchanges such depository receipts with shares of the class that are proposed to be delisted.

    By reading both the above clauses, it is clear that if the Depository Receipt holder converts his receipts into equity shares, he can participate in the bid. But the stage of conversion is not clear, whether before or after the Specified Date; and the time of intimation of the conversion to the Company is also not mentioned.

  6. In case of Compulsory Delisting of Companies by the Stock Exchanges, although it has been specifically provided in Reg 23 that an Independent valuer shall be appointed by the Exchange & the promoters shall be acquiring shares from public shareholders by paying them the determined fair value. But no where, the Control Mechanism for the same has been prescribed. Who will keep a check on whether the promoters of such compulsorily delisted companies have actually paid the said value to the shareholders or not. Further, strict penalties should be imposed on the defaulting promoters.

  7. Regulation 24 prescribe the Consequences of Compulsory Delisting as under: Where a company has been compulsorily delisted under this Chapter, the company, its whole time directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly access the securities market or seek listing for any equity shares for a period of ten years from the date of such delisting.
    The prescribed consequences are too severe in the sense that the promoters and even Directors cannot access the securities market or seek listing for a period of 10 years. Even the status of Nominee or Independent Directors has not been clarified.

  8. Even the provisions with regard to relisting of the delisted companies has also not been clarified.

 

 
Print This PageSocialTwist Tell-a-Friend
  Our Ventures   Delisting.in    Quick Links    Take Action    Communique
  LLPonline
Delisting
Startbizindia
ESOPOnline
corporatevaluations

About us
Media Centre
Contact us
Disclaimer
Privacy Policy
Sitemap
Delisting Regulations 2009
New Delisting Regulation
Delisting- A Boon or bane for the Small Shareholders
Comparison Between Old & New Regulations
   
Rapid Responder : Register | Login
Save this page
Add to Favourites
Make this Page your Home Page
Feedback
FAQ's

TwitterFacebookLinkedin

Corporate Professional