FinMin comes out with mandatory delisting norms
Press Trust of India / New Delhi June 12, 2009, 21:45 IST
To facilitate the process of stock exchanges delisting illiquid scrips, the government today allowed the
bourses to deregister any firm that has incurred losses for three consecutive years and has negative
networth, subject to certain conditions.
Coming out with norms for mandatory delisting of securities, the finance ministry said in a notification that
any recognised stock exchange can delist securities if trading in the securities remained suspended for
more than six months.
\"This will essentially help stock exchanges to clean some non-performing companies so that they can
provide better service to good companies. This will help in using the resources more effectively,\"
Jagannadham Thunuguntla, equity head of SMC capital, said.
However, for delisting the securities, the company must have been listed for three years and the
deregistering has to be approved by two-third public shareholders, the ministry said.
Also, the statement added, if the scrips of any company have remained infrequently traded during the
preceding three years, then too the stock exchange can delist it.
Yesterday, market regulator Sebi issued guidelines for voluntary delisting and made it tougher for the
companies to delist their shares until they get the approval of non-promoters at least two times the
number of votes cast against it.
If the shareholding of any company by the public has come down below a minimum level as per the listing
agreement and the company fails to raise it to the required limit within stipulated time, the securities can
be delisted.