30 Oct 2024        11:28:30 am

Economics

Delisting of Shares

Tags : Delisting of Shares

Topic: Capital Market

Why in the news?

• Markets regulator SEBI has notified rules allowing companies to delist shares through a fixed price mechanism as an alternative to the reverse book building process, a move aimed at facilitating ease of doing business for listed norms.

Source: The Hindu 

About Delisting of Shares: 

• It means removing the shares of a listed company from a stock exchange. 
  • Once delisted, the securities of that company can no longer be traded on the stock exchange.
• Delisting can be either voluntary or compulsory.
  • In voluntary delisting, a company decides on its own to remove its securities from a stock exchange.
  • In compulsory delisting, they are removed as a penal measure for the company not making submissions or complying with requirements set out in the listing agreement within the prescribed timeframes.
• If a company wants to delist its securities, it needs to buy back 90% of the total issued shares.

Securities and Exchange Board of India (SEBI):

• It is a statutory regulatory body that oversees the securities market in India.
• It was established in April 1988 as an executive body and was given statutory powers in January 1992 through the SEBI Act, 1992.
• It is responsible for issuing regulations for various participants in the securities market, such as listed companies, brokers, mutual funds, and rating agencies.
• It monitors and regulates the Indian capital and securities market while ensuring to protect the interests of the investors, formulating regulations and guidelines.

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