According to the panel, the minimum trading level of shares of a company on the regional or other exchanges should be considered. There should be some liquidity in every trading cycle. There should be some volume of trading for price discovery on the market
The K R Chandratre committee set up by the Securities and Exchange Board of India (Sebi) for suggesting norms for delisting of securities has recommended that a minimum percentage of equity capital should be in the hands of the public investors.
The panel says that this can be achieved with reference to the existing paid-up equity capital, market lot, share price, market capitalisation and the takeover code Regulations- Regulation 21 (3).
It has suggested following conditions for delisting a security from the stock exchange:
The minimum trading level of shares of a company on the regional or other exchanges should be considered. There should be some liquidity in every trading cycle.
There should be some volume of trading for price discovery on the market. The company should appoint market makers and criteria for no-trading should be considered.
The financial aspects should be taken into consideration which would include the ability of the company to generate revenue, income or profits. It must demonstrate earning power through its financial results, profits, reserves, dividend payouts for the last 2 or 3 years.
nIf there is hardly any public interest in the securities of a company then it should be delisted. The company should also have tangible assets. It is, therefore, for consideration as to what value of assets the company should own in order to be listed or continuously listed.
The track record of promoters or directors _ especially with regard to insider trading, manipulation of share prices, unfair market practices _ should be taken into account.
If the whereabouts of the company, its promoters or directors are not available and even letters sent by the exchange return undelivered and the company fails to remain in touch with the exchange.
The company has become sick and is unable to meet current debt obligations or to adequately finance operations, or has not paid interest on debentures for the last 2-3 years, or has become defunct, or there are no employees or liquidators appointed.
On the basis of the above norms and other relevant information available about the company and its promoters or directors, project, litigations, a profile of the company should be prepared and then a decision on delisting should be taken by an exchange.
The procedure for delisting has also been laid out by the committee:
The decision on delisting should be taken by a panel to be constituted by the exchange comprising two directors or officers of the exchange, one representative of the investors, one from the central government, one from Sebi and an executive director or secretary of the exchange.
Adequate and wide public notice before enlisting to be given through newspaper and be displayed on the notice board of the exchange. Publicity through press release to be given so that investors in all parts of the country are made aware of the proposed delisting.
Due notice of delisting and intimation to the company as well as other stock exchanges where the companys securities are listed should be sent.
Notice of termination of the listing agreement to be given.
An appeal against the decision of delisting may be made to the central government.
