Listing and Delisting of Securities on the Stock Exchange

Submitted to:Miss. Nidhi Prashar

(Assistant prof. In mgt.studies)

submitted by:Ramandeep Kaur

MBA 3rd A 805

Objective
To find out the need of getting any securities listed on any stock exchange. To understand the various formalities required for listing of securities on a stock exchange. To study the procedure of getting any security listed on a stock exchange. To know the Requirements and condition of listing To Know the Reasons for delisting of securities. To define the Procedure of delisting of securities. To describe the Effects of listing and delisting.

Listing of securities
Admission of the securities dealing on a recognized stock exchange. Security may be of company, Central or State Government. And other financial institutions/corporations, municipalities, etc.

Meaning of Listing

Admission of securities to dealings

Securities

Stock Exchange

Types of Listing
Initial Listing

Listing of shares of public issue

Listing issued on right basis

Listing of bonus shares

Result of merger or amalgamation

Important section related to listing

Section 73(1) of the Companies Act, 1956 Section 73(1A) of the Companies Act

Section 73(2) of the Companies Act, 1956

Section 4 of the securities contract Act, 1956

Objective of Listing
To provide liquidity to securities. To protect interest of investors by ensuring full disclosures.

Advantages of Listing
Opportunity to raise capital. Helps generate an independent valuation of the company Raises a company's public profile Continuing liquidity to the shareholders Market perception of their financial and business strength is enhanced.

Listing Requirements
Minimum Listing Requirements for New Companies.
Large cap companies
Minimum post-issue paid-up capital of the applicant company -Rs. 3 crore Minimum issue size - 10 crore Minimum market capitalization of the Company- Rs. 25 crore

Small cap companies

Minimum post-issue paid-up capital- Rs. 3 crore Minimum issue size- Rs. 3 crore Minimum market capitalization- Rs. 5 crore Minimum income/turnover- Rs. 3 crore in each of the preceding three 12-months period Minimum number of public shareholders- 1000.

Listing Requirements(Cont .)
Minimum Listing Requirements for Companies already listed on Other Stock Exchanges.
Minimum issued and paid up equity capital-Rs. 3 crore Profit making track record for the preceding last three years. Minimum net worth- Rs. 20 crore Dividend paying track record for at least the last 3 consecutive years. Company shall have at least two years listing record with any of the Regional Stock Exchanges

Listing Requirements(Cont .)
Minimum Requirements for Companies Delisted by seeking Relisting
Required to make a fresh public offer and comply with the extant guidelines of SEBI

Permission to Use the Name of the Stock Exchange in an Issuer Company's Prospectus.

Guidelines

Submission of Letter of Application

As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies

Allotment of Securities
As per Listing Agreement, a company is required to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, approval of the basis of allotment.

Trading Permission
As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days . Company may file appeal if allotment can't proceed

Payment of Listing Fees

All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time. Initial listing fee: Rs.20000 Annual listing fee(paid capital up to Rs 5 cr.): Rs.10000 (Above Rs.5 cr and up to Rs.10 cr):Rs.15000 (Above Rs. 10 cr and up to Rs. 20 cr): Rs.25000

What is delisting?
Delisting
Listing means admission of a Company s securities to the trading To be able to understand the meaning of delisting, one has to first understand the meaning of the word Listing . platform of a Stock Exchange, so as to provide marketability and liquidity to the security holders.

Listing

DELISTING
Delisting is totally the reverse of listing. To delist means permanent removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be tradeable at that stock exchange.

Types of delisting
Delisting

Compulsory Delisting

Voluntary Delisting

How to delist ??
Voluntary delisting from all the exchanges. Exit opportunity

Compulsory Delisting Delisting Voluntary delisting

Voluntary delisting from few exchanges but remains listed on at least one stock exchange having nation wide terminals

No exit opportunity

Small Company (whether listed at any of the Exchanges)

No Bidding, but exit opportunity is there

Compulsory delisting
A recognized stock exchange may, by order, delist any equity shares of a company on any ground prescribed in the rules made under section 21A of the Securities Contracts (Regulation) Act, 1956

Voluntary delisting
Voluntary delisting :VOLUNTARY DELISTING FROM ALL THE EXCHANGES VOLUNTARY DELISTING FROM FEW EXCHANGES BUT REMAINS LISTED ON AT LEAST ONE STOCK EXCHANGE HAVING NATION WIDE TERMINALS

VOLUNTARY DELISTING BY THE SMALL COMPANIES

Voluntary delisting of securities of a listed company

Conditions for de-listing Procedure for voluntary de-listing obtain the prior approval of shareholders by a special resolution passed at its general meeting. Make a public announcement De-listing from one or more stock exchanges Minimum number of shares to be acquired De-listing of one or all class of securities

relisting
Cooling period: The company that has voluntarily delisted its securities can relist its securities only after a period of 5 years. The company that has been compulsory delisted by the exchange can relist its securities only after a period of 10 years. Relisting of sick companies

In case of Delisted companies who were sick in the past, can be given opportunity of listing through Restructuring scheme passed by BIFR.

The sick companies are exempted from the provision of cooling period.

Sectors involved in delisted companies in 2010

No of Companies
Engineering 5% Hospitality 5% Finance 14% Automotive 2% Electronic/Power Telecommunication 5% 5%

Metal/Steel 7%

FMCG 23%

Mining/Construction 7% Miscellaneous 5% Manufacturing 2% Textile 9% Chemicals/Cement 7%

Food/Agriculture 4%

conclusion
There was a time not very long ago when there was no regulating agency like SEBI. Trading was done then also but then it was a one way route. Every company that issues shares to the public is required to have its shares listed on a recognized stock exchange. However, with the changing economic scenario and with the opening up of the Indian economy, the country witnessed huge influx of foreign capital. This resulted in growth in the number of listing of companies on the stock exchanges. Moreover, in the present scenario, if the market is studied minutely many MNC seeks to get their shares delisted at the expense of those investor who themselves are worried seeing their hard earned money whooping in number game.