Listing Of Securities

By | August 25, 2019
penalties and procedures for adjudication

The stock exchange releases a list of various companies that are eligible to trade in the securities. When a company gets itself registered in such a list in order to qualify as a recognized entity to deal with the securities, it is said that the company is a listed company. The listing of the company sends a positive message to those who are willing to invest their money in the securities market. It is assumed that if a company is listed on any of the recognized stock exchanges, it is financially sound, profit-making and many other impressions favoring the company.

The central government has made a mandate for public limited companies by virtue of Section 21 as of the Securities Contracts (Regulation) Act to get all of its securities listed on any of the stock exchanges in India. This was done with the motive of protecting the interests of the general public that is interested in investing their money in the securities market.

LISTING OF SECURITIES

If a company shows interest in getting the securities listed on the stock exchange, an application as per the prescribed format is to be filed with the exchange. This has to be filed before the Offer of Sale, if the mode of issuing securities is an offer of sale or before the prospectus gets issued if the mode to issue securities in the prospectus.

It is important for the company to comply with all the provisions of Companies Act, various forms on the listing of securities provided by SEBI time and again and any other condition, norms and other requirements which are in force and other conditions provided by various Regulation and Bye-laws issued by the government. These compliances have to be made to get the securities qualified for listing as well as continuous listing on the stock exchanges.

APPLICATION IN RESPECT OF OFFERS FOR SALE OR BOOK BUILDING OR NEW ISSUES

Applications or tenders for purchase or book- building or subscription for any kind of offer of sale or any new issue of any security is required to be submitted only if the one, who offers or issues the securities, provides an equal and fair chance to of buying or subscribing. In addition to this, it also offers brokerage to all the members involved in trading on the same terms and conditions.

Before the offering securities or securities for sale are issued, it is required that the offerer or the issuer has to get an in-principal approval for getting these securities listed on the Exchange. This approval has to be obtained from the exchange.

LISTING CONDITIONS AND REQUIREMENTS

  • It is the duty of Relevant Authority or Managing Director or Governing Board to make sure that permission for getting the securities listed and trading in the securities has to be given only if the issuer of the securities is in compliance with all the norms or requirements, conditions as provided by all the relevant regulations from time to time. Along with this, it is necessary for the issuers to get the credit of Demat shares and all the physical share certificates despatched to the accounts of those who hold the security and maintain depositories as well.
  • An issuer of the securities has to comply with the various conditions for listing, norms, and requirements as provided under Companies Act, SCRR, SCRA, Bye-laws, Rules, and Regulations of the stock exchange and the other norms that are provided by SEBI or any other Exchange from time to time. If the issuer has not followed the above-mentioned requirements, the Relevant Authority or Managing Director or Governing Board may refuse to grant permission regarding the admission, dealings or trading in the Exchange.
  • If the decision on the basis of allotment is taken after consulting with some stock exchange, it is required by the Relevant Authority or Managing Director or Governing Board of such a stock exchange to make the depositories aware about the approval that has been granted for admission to deal in any security on any of the exchanges.
  • Before the application of the company for getting itself listed gets approved, the company shall get a Listing Agreement executed with the Exchange ion the prescribed form. Companies are also required to make any kind of amendment or addition in the provisions of the Listing Agreements as per the scheme prescribed by the Exchanges or SEBI. These changes, whether amendment or addition, will be applied to the Company only if the provisions of these Listing Agreements contained any of these additions or amendments.
  • If an issuer offers a scheme of further issue or new issue, the Relevant Authority or Managing Director or Governing Board has the sole authority to grant the permission to trade in the securities on any of the recognized stock exchanges on the same day on all other stock exchanges where securities were admitted to dealings and given permission to trade.

WHEN ISSUERS ARE REGISTERED OUTSIDE INDIA

The admission of a company to deal with the securities on the Exchange is granted to a body corporate that is funded or to any other entity that is formed or registered outside India is dependent on two conditions. These conditions are as follows:

  • If such admission will adequately serve the public interest in India; and
  • If the fund or body corporate or any other entity is ready to follow the provisions of the applicable statute that are in force and any other requirement as prescribed by the Reserve Bank of India or SEBI or the Exchange or any other body formed under any statute.

APPLICABILITY OF LISTING CONDITIONS AND REQUIREMENTS

Whenever there is a matter related to those funds or body corporates or any other entity that is formed or registered outside India, Relevant Authority or Managing Director or Governing Board are empowered to dispense with or waive any provision of getting the conditions listed in Bye-laws, and Regulations or listing conditions enforced in a strict manner.

This power has to be used only after providing the appropriate reason for doing so. Further, the securities of any fund or body corporate or any other entity, which is not registered in India, are admitted for dealings on any of the stock exchanges only if it is capable to serve any of the public interest or if it is in the interest of trade as per the opinion of the Relevant Authority or Managing Director or Governing Board.

LISTING APPROVAL

The approval may be granted to the issuer by the Exchange for those securities that are supposed to be listed on the Exchange. This approval is subject to the compliance of requirements and norms and the fulfillment of listing conditions and other guidelines issued by the Exchange at the end of the issuer. This form of security is known as listed security.

ADMISSION TO DEALINGS

When a stock exchange grants permission to securities to begin the trade on ATS of the Exchange according to the provisions specified in these Bye-laws or any other Regulation relevant to the trading of securities. Such an event where permission is granted to the securities is known as admission to dealings.

LISTING FEES

The relevant authority of the Exchange or the Board is empowered to fix the fees for getting the securities listed. It depends on the discretion of the Board to determine the value of the rates for listing securities.

DEPOSITS OR FEES TO BE PAID BY ISSUER

There are a lot of people whose securities have been granted admission to dealings. Such issuers are required to pay deposits and listing fees within a stipulated time period. This time period is prescribed by the stock exchange from time to time.

CONSEQUENCES FO NON- COMPLIANCE  BY ISSUER

The Relevant Authority or Managing Director or Governing Board has the power to shift the mode of trading to trade- for- trade basis from a normal basis or to pass the suspension of the admission to dealings on any of the recognized stock exchanges that have been granted to the securities.

It is a mandate for the Relevant Authority or Managing Director or Governing Board to provide reasons in writing for the decision taken by them. Further, it is done on account of non- compliance or the breach of any of the guidelines laid down for admission to dealings or for manipulating trading or for manipulating the prices of securities or for any other reason.

The decision taken by the authorities is applicable for the duration as determined by the adjudicating officer. When the period of suspension is about to end, the dealings in the security may be reinstated by the Relevant Authority or Managing Director or Governing Board. The decision taken by the authority will always remain subject to the provisions of SCRR and SCRA.

The decision of getting the trade in any security on the stock exchange suspended or shift in trade to trade- for- trade basis from normal basis has to be taken by Relevant Authority or Managing Director or Governing Board only when there is a violation of any of the provisions prescribed by the Listing Agreement or due to any action of surveillance or for any other reason. Such a decision has to be made communicated by the Exchange to other stock exchanges on which the securities were listed.

VOLUNTARY DELISTING BY COMPANY

There is a provision that allows companies to delist their securities from the recognized stock exchange where it was listed i.e. they are allowed to withdraw from the admission to dealings. This provision is subject to the various guidelines, provisions, procedures, and norms that are laid down by the SEBI or Central Listing Authority or Central government to govern the activities of listing or delisting and suspension or trading in securities. These above guidelines have to be complied with.

BUY-BACK OF SECURITIES BY COMPANY

The Companies Act allows a company or body corporate to buy- back its securities that it has issued earlier. This provision of the buyback is subjected to certain guidelines, requirements, and conditions issued by the Central Government or SEBI on this behalf.

A company that is willing to buy- back its securities has to adhere to these guidelines, norms, requirements, and conditions in a very strict manner. If there is any non- compliance or breach on the part of the company will make it liable for any penalty or action that the authorities of Exchange may deem fit.

DELISTING ON THE EXCHANGE OR WITHDRAWAL OF ADMISSION TO DEALINGS

The relevant Authority or Managing Director or Governing Board has the authority to take away the admission to dealings on any of the stock exchanges given to any company. The withdrawal of admission to dealings can be done on the ground of non- compliance with or breach of any of the conditions required for continuous listing or on any other ground, which might be prescribed by the regulations or guidelines issued from time to time.

The authorities are required to follow the principles of Natural Justice. They have to provide a reasonable opportunity to the company to represent their case and thus, complying with the principle of audi altrem partem. Further, they are also required to record the reasons for their adjudication in writing and hence, complying with the principle of speaking orders.

RIGHT TO APPEAL AGAINST DELISTING

Any person, who is affected by or aggrieved from the decisions taken by the authorities of Exchange such as the order to get the securities of a company that has been admitted to dealings on the Exchange delisted, has the right to appeal to SEBI. The appeal can be filed within a period of thirty days that is to be calculated from the date on which the decision of exchange was notified to the company.


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