January 19, 2011

Info Wanted on PNB Finance Shares Listing on Calcutta Stock Exchange

Shares of PNB Finance are listed on Delhi Stock Exchange  ( DSE ) and Calcutta Stock Exchange ( CSE ).

Presently DSE is closed for trading.

But CSE is open.

Are shares of PNB Finance traded on the CSE ?.

And if not why not  ?

Fellow Blog readers , please guide.


For History of The Punjab National Bank Limited now renamed PNB Finance And Industries Limited ( and for pic of its first Branch ) Please click :-



Unknown said...

It is reported that Delhi Stoch Exchange has received SEBI okay for restarting trading and Delhi Exchange likely to restart tading by April 2011. Anyone can throw further light on this?

Satyakam said...

I don't think that PNB Finance is being traded on CSE. I presume that neither the company is interested in getting the company listed nor the some "active" shareholder want the company to get listed.

It’s a promoter investment company and I doubt the promoters will want to list it. Holding companies are similar to the perpetual close-ended mutual funds which have never paid dividends. Their stocks trade at a discount because the value of the investments is essentially on paper. While there are benefits to going public, it also means additional obligations and reporting requirements on the companies and its directors.

In this case, we see that couples of populace/traders are controlling the rates and there are supply side constraints. Investing in a holding arm of a group means holding a number of companies from the same business group from different sectors. Holding companies, which play an important role in corporate finance in America and in other Continental European countries, often trade at a discount to their estimated net asset value (NAV).

Valuation discounts typically relate to either the lack of control or lack of marketability inherent in an equity interest. While these discounts are usually considered in many business appraisals, the determination of these values differs, sometimes significantly, depending upon whether a company is valued as an operating company or as a holding company.

There are various types of discounts that are applicable to holding companies. The appraiser must have a thorough understanding of the company, its purpose and operational composition, and the equity rights attributed to it interest holders in order to apply the appropriate discounts and determine a reasonable estimate of value for a company.

Ashwani Kumar Aggarwal said...

Thanks for the analysis.

The Punjab National Bank Limited now renamed PNB Finance And Industries Limited was always a listed publicly held company. Like many other shares PNB Finance became illiquid because on the decline of the Regional Stock Exchanges post online trading by BSE / NSE.

Is there any legal reedy by which share holders can move a Resolution proposing to get the shares listed in BSE / NSE now that CSE or DSE do not serve any worthwhile purpose.

Satyakam Mishra said...

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.

Anonymous said...