(a) whether the SEBI approved the delisting panel`s recommendations
to set up a central listing authority;
(b) if so, the details thereof;
(c) the details of other recommendations made by the
delisting panel; and
(d) the action taken by the SEBI on each recommendations?
MINISTER OF STATE IN THE MINISTRY OF FINANCE & COMPANY AFFAIRS
(SHRI ANANDRAO V. ADSUL)
(a) & (b) The Securities and Exchange Board of India
(SEBI) has informed that the SEBI board has considered
and accepted the recommendations of the delisting committee
to set up the central listing authority.
The details of the recommendations to set
up a central listing authority are as under:
A) To bring about the uniformity in the exercise
of due diligence in scrutinizing listing applications, a
separate agency be formed designated as
the Central Listing Authority (CLA);
· The initial role of the CLA may be
confined to scrutinizing listing agreement and
reviewing the provisions of listing agreement from time to time;
· It would be up to SEBI to expand the scope of CLA
to include monitoring and compliance with the
listing agreement at later date;
· The CLA will be suitably empowered by SEBI;
· A company seeking listing of fresh securities would
make an application in a prescribed format listing
first to the CLA. The CLA should give its opinion
within 30 days after submission of application.
After receiving the approval of CLA, the
company would be free to apply to any stock
exchange along with the letter of approval of CLA.
The stock exchange would independently decide on
whether to list the security or not with reference
to its listing criteria and in case it does not
list the security, it shall give its reasons in writing.
The stock exchange shall convey its decision within
the time frame already prescribed under the
applicable regulations. The decision of
the stock exchange would be appeal able to
the securities appellate tribunal;
· The members of the CLA should not exceed 11
and CLA may be chosen from among the judiciary,
lawyers, and people having expertise in securities
market regulation, financial experts,
academicians and investor associations. 4 members
of the CLA should always be drawn from
the stock exchanges who would provide the CLA
with expertise and experience in the area
of scrutinizing applications for listing;
· The quorum will be of 4 members. The representative
of the stock exchanges where listing may
be sought by the company, would not form
a part of quorum of the CLA. Of the members
present at the time of granting approval to a
listing application, 50% should be non-stock exchange members;
· SEBI would draw up a panel of names for members of the CLA;
· The term of a member shall be for a period of 3
years unless the member has been found unfit for
any reason or the member has himself expressed his
desire to discontinue. No member may be
given re-appointment after two terms of 3 years each;
· to enable the CLA to function efficiently, it should
have a permanent secretariat which may be provided
by the stock exchanges / SEBI who may depute personnel
to the CLA to enable CLA to analyze and
scrutinize applications, convene meetings etc;
· the CLA will be accountable to SEBI and shall
provide a quarterly report on their activities in
a specified format to SEBI;
· SEBI would periodically review the performance and
working of CLA based on the reports and may
reconstitute the CLA as and when necessary.
B. Reinstatement of delisted securities should
be permitted by the stock exchanges with a
cooling period of 2 years. It would be based on
the respective norms/criteria for listing at the
time of making the application for listing and
the application will be initially scrutinized by the CLA;
(c) Some of the other recommendations of the
Committee are as follows :-
· There should be no prohibition per se against
delisting securities provided that the securities
of company have been listed for a minimum period
of 3 years on any stock exchange;
· There should not be any selective restriction or
discrimination against any class of companies for delisting.
However, the regulatory framework may need to
be strengthened to prevent any misuse by the
companies and to ensure that investors` interests are
protected at all times;
· Any acquisition of shares or scheme or arrangement,
by whatever name referred to, which may result
in delisting of securities shall be in
compliance with the relevant provisions under any
SEBI regulation, circular or guideline and the
provisions of the listing agreement so as
to ensure protection of investors` interest;
· SEBI should clarify once again that no
company could use the buy-back provision to
delist the company;
· There should be comprehensive provisions which
should also include procedures governing the
entire subject of delisting of securities of
companies, and should cover cases in which
companies on their own seek delisting of
their securities from all or some of
the stock exchanges, as well as those where
the stock exchanges can compulsorily delist the
securities of a company;
· The comprehensive provisions for delisting will be
applicable in cases where a person in control of the
management is seeking to consolidate his holdings in
a company, in a manner which would result in the
company being delisted, or in cases where as a
result of a takeover process, the public (non
promoter holding) falls below the prescribed threshold;
· The exit price for delisting should be in
accordance with the book building process;
· A company which is listed on any stock exchange
may be allowed to delist from that stock
exchange without an exit offer being made to
its shareholders provided that the securities of
the company are listed on BSE or NSE which
have nationwide reach. as the securities of the
company would continue to be listed on stock
exchanges which have nation wide reach, investors`
interests would not be jeopardized and hence no
additional exit route need be separately provided to them;
· In all other cases, viz. when a company which is
listed on any stock exchange or stock exchanges other
than BSE or NSE seeks delisting, an exit offer
must be made to the shareholders in accordance
with the book building process;
· There should not be any compulsion for the existing
companies to remain listed on any stock exchange
merely because it is a regional stock exchange
and companies should have the freedom to list
on a stock exchange of its choice;
· Even if the shares of a company are
delisted, the fixed income securities may continue
to remain listed on the stock exchange. If
however a company has a convertible instrument outstanding,
it should not be permitted to delist its equity
shares till the exercise of the conversion options;
· Stock exchanges should be empowered to delist
those companies which have been suspended for
a minimum period of six months for non-compliance with
the listing agreement;
(d) SEBI is in the process of issuing guidelines
with respect to delisting of shares and central listing authority.