January 20, 2011

BSE / NSE Listing of " Rare Shares "- Legal Options ?

[ We express our sincere gratitude to Satyakam Misra for this very well researched article ] :-

No obligation to have its shares listed on the Stock Exchange

Law is open to everyone in the same way as the Ritz Hotel. If you have money, you get in. Rarely in history, have the shareholders ever coerced the company into listing. I don’t think such things are possible. We have seen that in case of Sistema which has seen consistent dilution of equity and preferential allotment of the shares to the promoters without listing. Sesa Industries is also another example.

The clause 40A of the listing agreement has been amended to incorporate the public float norms announced in June 2010 (as amended in August 2010), which require listed companies to maintain a public shareholding of 25%. I don’t think PNB finance has this level of public holding.

Companies desirous of getting their securities listed at BSE are required to enter into an agreement with BSE called the Listing Agreement, under which they are required to make certain disclosures and perform certain acts, failing which the company may face some disciplinary action, including suspension/delisting of securities.
Please be aware that there is no obligation on the part of the public limited Company to have its shares listed on the stock exchange. As held in the case of Raymonds Synthetics Ltd. V/s. Union of India, AIR 1992 SC 647, it is only if a Company intends to offer its shares to the public for subscription by issue of a prospectus that it must apply to the stock exchange for permission to list its shares in terms of section 73, before issuing such a prospectus.

Once a shareholder purchases shares of the Company the money becomes an asset of the Company and the shareholder has only the right to obtain dividend, be present at meetings, etc. The Director of the Company does not hold the monies in a fiduciary capacity and therefore he would not be entrusted with the authority over the same.

   - Satyakam Misra


Ashwani Kumar Aggarwal said...

Surely , there should be way out for common investors.

These are not private limited companies or HUF s .

Publicly Held Public Limited Companies have a solemn obligation to List their shares in a meaningful way ( not just notional in nearly defunct Regional Stock Exchanges )

Satyakam Mishra said...

Appreciate that you liked it and hope the readers like it as well.

I however was in fear that it will not pass through since it was lengthy.

Unknown said...

mishra ji please give your mail id &mobile no ,want to buy sell shares with you.


Ashwani Kumar Aggarwal said...

Shares which have not been got officially listed in BSE / NSE by the companies concerned should be allowed to be traded in BSE / NSE under the " Permitted " category . For stock exchanges investors ' interests should take precedence over companies concerned .


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