Date:05/11/2006 URL: http://www.thehindu.com/2006/11/05/stories/2006110502791300.htm

Business

Draft rules on delisting

Special Correspondent

Responses invited by November 30

CHENNAI: The Finance Ministry has issued draft amendments to the Securities Contracts (Regulation) Rules, 1957, specifying the grounds on which stock exchanges may delist securities. The grounds include, among others, the listed company incurring losses during the preceding three consecutive years and its net worth falling below its paid-up capital. The draft amendments, to which responses have been invited by November 30, (at msahoomof@gmail.com), say a company could be delisted if trading in its securities had remained suspended for more than six months, if its securities had remained "infrequently traded" during the preceding three years, if the addresses of the company or any its promoters or directors were not known or if false addresses had been furnished.

If the shareholding of the public in a company comes below the stipulated minimum, this too would invite delisting.

However, delisting should not be undertaken without giving the company a reasonable opportunity to be heard.

The draft also lists conditions under which a stock exchange may grant a request of a company to delist its securities, including approval by three-fourth of the shareholders and a commitment by promoters or directors to purchase the outstanding securities of the minority and non-promoter shareholders. The company should have been listed for a minimum period of three years.