Listing Listing and and De De-Listing Listing of of Secu Securities rities Anjali Aggarwal Partner & Head: Capital Market and Stock Exchange Services
Listing of Securities means admission of securities of an issuer to trading privileges (dealings) on a stock exchange through a formal agreement.
Whose securities are eligible to be listed? The securities eligible to be listed may be of any: Public limited company, Central or State Government, Quasi governmental and Other financial institutions/corporations, municipalities, etc.
Provide liquidity and marketability to securities . Channelize & Mobilize savings for economic development. Objectives of To unlock the hidden value Listing of the business To attain market capitalization No Long Term Capital Gains Tax on transfer of shares through the Exchange, on payment of STT
Fund Raising and exit route to investors Listing provides an opportunity to the corporates to raise capital to fund new projects expansions/diversifications and for acquisitions. It also provides an exit route to private equity investors as well as liquidity to the ESOP-holding employees. Read ady y Marke keta tabil bility ty of S Secur curit ity Listing brings in liquidity and ready marketability of securities on a continuous basis adding prestige and importance to listed companies.
Fair Price for the Securities The prices are publicly arrived at on the basis of demand and supply; the stock exchange quotations are generally reflective of the real value of the security. Thus listing helps generate an independent valuation of the company by the market. Collateral Value of Securities Listed securities are acceptable to lenders as collateral for credit facilities. A listed company can also borrow from financial institutions easily as it is rated favorably by lenders of capital; the company can also raise additional funds from the public through the new issue market with a greater degree of assurance. Better Corporate Practice Since violations of the listing agreement entail de-listing/suspension of securities from the exchange, the listed companies are expected to follow fair practices to the advantage of investors and public.
Supervis vision n and Control ol of T Trading ng in S Secur curit ities ies All transactions in securities are monitored by the regulatory mechanisms of the stock exchange, preventing unfair trade practices. It improves the confidence of small investors and protects them. Ability to ra raise further her capital An initial listing increases a company's ability to raise further capital through various routes like preferential issue, rights issue, Qualified Institutional Placements and ADRs/GDRs/FCCBs, and in the process attract a wide and varied body of institutional and professional investors.
Regulatory Framework for Listing of Securities
WAYS S TO GE GET LIS LISTED TED By making an Initial Public Offer (IPO): When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. Through Direct Listing: The Company which is already listed on any Recognized Stock Exchange can apply to Stock Exchange having nation-wide terminal to get its securities listed without coming out with an IPO.
P RE - R EQUISITES OF L ISTING All Listed Companies are required to maintain minimum level of public shareholding at 25% Where the public shareholding falls below 25% at any time: The Company shall bring the public shareholding to 25% within a period of 12 months from the date of such fall, in the manner specified by SEBI.
L L i s t i n i s t i n g g A g g r r e e m e e m e n n t t Till Dec 15, l isting of securities was governed by way of a formal arrangement via listing agreement which was entered into between the issuer and the stock exchanges where the securities of the issuer are listed or intended to be listed. It was a binding Agreement between the Company & Stock Exchange, aimed to provide transparency & timely & accurate disclosures, with severe penal provisions for Non- Compliances.
SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 www.company.com
Listing Regulations…….An introduction • Applicable wef 1 st Dec 15 • To bring the basic framework governing the regime of listed entities in line with Companies Act, 2013. • Compiling all the mandates of varied SEBI Regulations/ circulars governing equity as well as debt segments of capital market under the ambit of single document. www.company.com
Layout of Listing Regulations • Preliminary Section prescribing the scope of Listing Regulations Chapter I • Guiding Principles Governing Disclosures & Obligations of Listed Entity Chapter II Chapter III • Common Obligations of Listed Entities www.company.com
• Applicability on such entities whose SPECIFIED SECURITIES are listed on the Stock Exchanges . Chapter IV • Applicability on such entities whose Non- Convertible Debt Securities or Non- Convertible Redeemable Preference Shares Chapter V are listed on the Stock Exchanges & VI • Applicability on such entities whose Indian Depository Receipts are listed on the Stock Chapter Exchanges VII www.company.com
• Applicability on such entities whose Securitised Debt Instruments are listed on Chapter the Stock Exchanges VIII • Applicability on such entities whose Mutual Fund Units are listed on the Stock Exchanges Chapter IX • Duties & Obligations of the Recognized Stock Exchange(s) and provisions for action Chapter X in case of default. & XI • Miscellaneous Provisions Chapter XII www.company.com
Specified Securities Listed on Main Board or SME Exchange or I TP. Non-convertible debt securities ( NCDs) Non- Convertible Redeem able preference Shares Applicability ( NCRPS) Listed Entities Of Whose Securities are Perpetual Listed On any Listing Debt securities Recognised Stock Exchange Regulations Securitized Debt instrum ents I ndian Depository Receipts; Mutual fund Units any other securities as m ay be specified by the Board www.company.com
MAIN HIGHLIGHTS OF CHAPTER III Common Obligations Of Listed Entities www.company.com
Regulation 7: Share Transfer Agent (STA) New • Submission of compliance certificate duly certified by the Compliance Officer and the authorized representative of STA to the Stock Exchanges where their specified securities are listed within 1 (one) month of end of each half of the financial year. Earlier • This Regulation casts an additional requirement to what is prescribed in Regulation 40(9) of the Listing Regulations and Clause 47 (c) of the erstwhile Listing Agreement www.company.com
Regulation 9: Preservation of Documents Formulation of Preservation Policy for Documents documents whose preservation shall be permanent in nature; documents with preservation period of not less than eight years after completion of the relevant transactions. (Maintenance of documents in electronic mode will be deemed to be complying with the aforesaid regulation.) www.company.com
Regulation 12: Payment of Dividend, Interest, Redemption or Repayment. Mandatory use of E-paym ent facility, as approved by RBI , for the purpose of m aking the follow ing paym ents: DIVIDENDS REDEMPTION OR INTEREST REPAYMENT AMOUNTS where it is not possible to use e-payment facility then ‘payable-at-par warrants’ or cheques may be issued. If the amount of Dividend> Rs 1,500/-, the ‘payable- at-par warrants’ or cheques shall be sent by speed post www.company.com
Regulation 13: Grievance Redressal Mechanism New • Registered on the SCORES platform or any other similar platform to electronically handle the investor complaints. • Filing of Statement of Investor Grievance to the stock exchange, within 21 days from the end of the relevant quarter . Earlier • In the erstwhile Listing Agreement, the information pertaining to pending investors complaints were submitted on a quarterly basis only along with the Financial Results. www.company.com
Main Highlights of CHAPTER IV Obligations in case of Listing of Specified Securities www.company.com
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