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Listing and delisting of securities and listing agreement

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subject : listing agreement , listing and delisting securities analysis & portfolio management

subject : listing agreement , listing and delisting securities analysis & portfolio management

Published in: Economy & Finance, Business

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  • 1. LISTING AND DELISTING : LISTING AGREEMENT ANTONY THANKACHAN ROSA CHERIYAN SALU P KUMAR
  • 2. LISTING • Admission of securities of an issuer to buying and selling rights (dealings) on a stock exchange by way of a formal agreement • The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc. • The main aim of admission to dealings on the exchange is to give liquidity and also marketability to securities, as also to give a mechanism for efficient control and supervision of trading
  • 3. OBJECTIVES OF LISTING Three Main Objective of listing • Provide liquidity to shares • Mobilize savings for economic development • protect interest of investors by ensuring full disclosures by regulating dealings in securities
  • 4. BENEFITS OF LISTING 1. A premier market place :I) provides marketability II) It ensures consistency and transparency. 2. provides and improves goodwill of the company
  • 5. 3.Unprecedent reach:i) Stock exchange provides trading platform. ii) Number of investors can avail of trading facilities. 4.Price detection:i) A listing facilitates companies to ascertain a price for their shares. 5. Low cost capital:i) The primary gain of raising capital from the market. ii) It avoids a number of intermediation expenses apparent in the other forms of capital raising
  • 6. DEMERITS OF LISTING • Once the share are listed the company subject themselves to various regulatory measures of stock exchange SEBI. • They have to disclose vital information to the stock exchange ( competitors may get to know that) • Leads to speculation. • The company has to send notice for annual general meeting to a large number of shareholders, resulting in expenditure
  • 7. LISTING REQUIREMENTS FOR LARGE CAP COMPANIES FOR SMALL CAP COMPANIES  Minimum post issued paid up capital should be 3 crores  Minimum issue size shall be 10 crores  Minimum market capitalization shall be 25 crores • Minimum post issued paid up capital should be 3 crores • Minimum issue size shall be 5 crores • Minimum market capitalization shall be 5 crores • Minimum no : of public shareholders after the issue shall be 1000.
  • 8. LISTING PROCEDURE  Approval of Articles of Association. - Rule 19(2)(a) - unclaimed dividend - common form - share certificate.  Approval of draft prospectus. - SEBI acknowledge letter  Submission of Application
  • 9.  Payment of listing fees and deposits of securities money.  Supporting documents required as follows: • • • • • • Clauses of Articles of Association. Application Letter for Listing. Listing Application providing pre-issue details of securities. Listing Application providing post-issue details of securities. Checklist for supporting documents ( as applicable to the issuer) Schedule of Distribution  Compliance of Listing Agreement and Laws
  • 10. DELISTING • Means removal of a particular securities for dealing in a stock exchange. Hence the delisted securities can no longer be traded in that stock exchange. • 2 ways of delisting - compulsory delisting - voluntary delisting
  • 11. COMPULSORY DELISTING • It is initiated by the stock exchange only for the default of by the co. with terms of listing agreement. • Norms are laid down by the SEBI guidelines , its non compliance causes compulsory delisting • Eg : Abhishek cements ltd , Asian tractors • Reasons - unfair trade practices - non payment of listing fees - violation of listing agreement - non redressal of grievances.
  • 12. VOLUNTARY DELISTING • The co. or promoters can opt to remove its securities from the stock exchange • SEBI has given manner , procedure and guidelines for the same. • Eg : India gypsum ltd , BST ltd , BPL engineering ltd • Reasons - unable to pay listing fees - capital base is small - business is sick , suspended or closed - mergers , demergers , amalgamation
  • 13. COMPLAINCE WITH LISTING AGREEMENT Under Listing agreement company undertakes following actions • To provide facilities for prompt transfer, registration, subdivision and consolidation of securities • To give proper notice of closure of transfer books and record dates • To furnish financial results on a quarterly basis • Listing Department of the Exchange can take penal action against the defaulting companies