Financial Daily from THE HINDU group of publications
Thursday, Aug 21, 2003
Financial Daily from THE HINDU group of publications Thursday, Aug 21, 2003 |
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Markets
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Economic Offences Securities Bill will empower SEs to dislist cos for insider trading K.R.Srivats
New Delhi , Aug. 20 STOCK exchanges in the country may soon be empowered to delist the securities of a listed company if the company or its promoters or directors were to indulge in "insider trading" or "unfair trade practices." A provision to this effect has been incorporated in the Securities Laws (Amendment) Bill 2003, which would amend the Securities Contracts (Regulation) Act, 1956 to put in place a host of regulatory provisions governing the delisting of securities of listed companies. The Lok Sabha on Monday passed the Securities Laws (Amendment) Bill, 2003. Failure on the part of a listed company to redress complaints of investors may also result in delisting. Powers to delist the securities of such companies are to be conferred upon the stock exchanges. The other grounds under which a stock exchange may delist securities include cases where the company has incurred losses or its net worth has been reduced to less than its paid-up capital. Further, a stock exchange can, after the enactment of the Bill, delist if the promoter or directors or persons in management indulge in malpractices. This include malpractice in dematerialisation of securities in excess of issued securities or delivery of securities which are not listed or for which trading permission has not been given. Failure to comply with the requirements of the listing agreement including situations where the shareholding of the company held by public fall below the limit specified under the listing agreement may attract de-listing of securities. Delist can happen if the company were to change its registered office in contravention of the provisions of the Companies Act or if the addresses of the promoters or directors of a company are not known or addresses of such promoters or directors are false. A stock exchange is also being empowered, through the proposed legislation, to delist the securities of a listed company if the securities have not been continuously traded on a recognised stock exchange or trading in the securities of the company has remained suspended for a period of more than six months.
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