April 29, 1998

The President/Executive Director/Managing Director

All the Stock Exchanges

Dear Sir,

 Amendment to Listing Agreement Delisting Committee

SEBI had appointed a Committee under the Chairmanship of Dr.K.R.Chandratre to look into various issues concerning delisting of securities and listing fees payable by companies to the Stock Exchanges. The report of the committee was submitted to SEBI. The recommendations of the committee were considered by the SEBI Board in its meeting held on March 27,1998. You are advised to give effect to the following decisions of the Board by amending the Bye-laws/ Listing agreement of the Stock Exchange.


The Stock Exchanges shall fix the quantum of listing fees after obtaining approval from SEBI. The Stock Exchanges shall collect three years listing fees upfront at the time of initial listing and subsequently once in every three years. The amount so collected shall be kept in an escrow account with the stock exchanges which may be drawn periodically by the stock exchanges to the extent of its yearly annual listing fees.


The basic minimum norms for listing of securities on the stock exchanges shall be uniform for all the exchanges and the stock exchanges may prescribe additional norms over and above the minimum norms. In this connection, the uniform basic minimum norms shall be as per the guidelines of SEBI which shall be issued in this regard. These norms should be a part of the bye-laws of the Stock Exchanges.


Voluntary delisting of securities on the Stock Exchanges other than the Regional Stock Exchange shall be permitted by the Stock Exchanges on the request of companies.

In this regard the following procedures are required to be complied by the companies and the stock exchanges.

The company should obtain a specific prior approval of the holders of the securities which are sought to be delisted by a special resolution passed at a general meeting after giving due notices thereof in the manner provided in the Companies Act and

also by spcial notice in newspapers with detailed explanation and justification for the proposed delisting.

The holders of securities in the region where the concerned Stock Exchange is located should be given an exit opportunity requiring the promoters or those who are in the control of the management of the company to buy, or to make arrangement for buying, the securities of such holders after fixing a record date specifically for this purpose and at a price which should not be less than the weighted average of the traded price of the security in the preceding six months at any of the Exchanges on which the securities are listed and where the highest of the volume of the securities was traded. In case there was no trading at any of the Exchanges during the preceding six months, the price for the purposes of the buying of the securities should be a fair price to be computed by the auditors of the company. (The allocation of regions amongst the Stock Exchanges is set out in Annex I.)


The Exchanges may delist the securities of companies on their own. While doing so, the stock exchanges shall follow the procedure laid down in Annexure II. The Stock Exchanges may note that a Committee as mentioned therein is to be set up by each Stock Exchange in the prescribed manner to decide on compulsory delisting. The constitution of the Committee shall be approved by SEBI. It may be noted that the aggrieved person can make an appeal to SEBI against delisting of securities of companies by the stock exchanges.

The Stock Exchanges should not resort to delisting of securities on the ground of non-payment of listing fees unless the efforts made for recovery of the fees by persuasion or force through all other remedies available, fail.

The Stock Exchanges should provide adequate and effective intimation to the holders of the securities which are proposed to be delisted, and also right of hearing to those holders.

In order to provide liquidity in such scrips after delisting, the stock exchanges shall allow trading in the securities under permitted category for a period of one year after delisting the securities.

A public notice before and after the delisting of securities should be given by the concerned Stock Exchange.


The Directors’ Report of the companies shall disclose the fact of delisting, together with a statement of reasons and, in the case of voluntary delisting justification therefor. Likewise, disclosure as to suspension of trading in the securities should be made by the company in its Directors’ Report.

Every listed company should in each annual report specify the name and address of each Stock Exchange at which the company’s securities are listed and whether the company has paid the annual listing fees to each such Exchange.


The reinstatement of the delisted securities shall be permitted by the Stock Exchange within a period of one year after the date of delisting, without requiring the company to make an application as if it were the case of fresh listing. However, if listing of the delisted securities is sought after one year, it should be considered as a case of a fresh listing.

The Board has also considered the recommendations of the Committee which are within preview of Government of India. Suitable directions will be made to the stock exchanges after appropriate authorities effect amendments to respective acts/rules.

Yours faithfully,



Encl: As above



Hyderabad Andhra Pradesh
Gauhati Assam & Other North East States
Magadh Bihar
Delhi Delhi/Haryana
Ahmedabad, Vadodara, Saurashtra Kutch Gujarat
Mangalore, Bangalore Karnataka
Cochin Kerala
Indore Madhya Pradesh
BSE, Pune Maharashtra, Goa, Dadra Nagar Haveli, Diu & Daman
Bhubaneshwar Orissa
Ludhiana Punjab, Jammu & Kashmir, Himachal Pradesh
Jaipur Rajasthan
Madras/Coimbatore Tamil Nadu
Kanpur Uttar Pradesh
Calcutta West Bengal
OTCEI & NSE All India




Minimum percentage of equity capital (floating stock) should be in the hands of public investors This may be seen with reference to —

Existing paid-up equity capitalMarket lot Share price – very high, medium, low Market Capitalisation SEBIs Takeover Regulations-Regulation 21(3) (reproduced below)

“(3) If the public offer results in the public shareholding being reduced to 10% or less of the voting capital of the company, or if the public offer is in respect of a company which has public shareholding of less than 10% of the voting capital of the company, the acquirer shall either –

within a period of 3 months from the date of closure of the public offer, make an offer to buy out the outstanding shares remaining with the shareholders at the same offer price which may result in delisting of the target company, or
undertake to disinvest through an offer for sale or by a fresh issue of capital to the public, which shall open within a period of 6 months from the date of closure of the public offer, such number of shares so ask to satisfy the listing requirement.
The minimum trading level of shares of a company on the regional /o0ther exchanges. There should be some liquidity in every trading cycle. There should be some volume of trading for price discovery on the market. The Company should appoint market makers. Criteria of no-trading may be considered.
Financial aspect/Business aspects
The company should generate reasonable revenue/income/profits. It should be operational/working. It must demonstrate earning power through its financial results, profits, reserves, dividend payout for last 2/3 years.
If there is hardly any public interest in the securities the company then it is for consideration whether its “listed company” label needs to be retained any more.
The company should have some tangible asset. It is therefore for consideration as to what value of assets the company should own in order to be listed continuously listed.
Track records of compliance of the Listing Agreement requirements for the past three years.
Submission of audited/unaudited results, annual report, other documents required to be furnished to the Exchange,
Book closure Record date with due notice
Payment of listing fee
Compliance with SEBI (Substantial of Shares & Takeovers) Regulations, 1997 and clauses 40A and 40B of the Listing Agreement.
Service to investors especially with regard to timely return of shares duly transferred, timely payment of dividend, communication of price sensitive information, etc.
Failure to observe good accounting practises in reporting earnings and financial position
Publishing half yearly unaudited/audited results
Frequent changes in –
Accounting year

Share transfer agent

Registered office


Promoters’ Directors’ track record especially with regard to insider trading, manipulation of share prices, unfair market practises (e.g. returning of share transfer documents under objection on frivolous grounds with a view to creating scarcity of floating stock, in the market causing unjust aberrations in the share prices, auctions, close-out, etc. (Depending upon the trading position of directors or the firms).
If whereabouts of the company, its promoters directors are not available and even the letters sent by the Exchange return undelivered and the company fails top remain in touch with the Exchange.
The company has become sick and unable to meet current debt obligations or to adequately finance operations, or has not paid interest on debentures for the last 2-3 years, or has become defunct,or there are no employees, or liquidator appointed, etc.
On the basis of the above norms and other relevant information available about the company, its promoters/directors, project, litigations, etc., a profile of the company should be prepared and then a decision on delisting should be taken by an Exchange.

The decision on delisting should be taken by a panel to be constituted by the Exchange comprising the following :

Two directors/officers of the Exchange (one director to be a public representative),
One representative of the investors
One representative from the Central Government (Department of Company Affairs)/ Regional Director / Registrar of Companies
One representative from SEBI.
Executive Director / Secretary of the Exchange
Adequate and wide public notice before delisting to be given through newspapers and on the notice board of the Exchange. Publicity through press release and otherwise to be given so that the investors in all parts of the country are made aware of the proposed delisting.
Due notice of delisting and intimation to the company as well as other Stock Exchanges where the company’s securities are listed to be given.
Notice of termination of the Listing Agreement to be given.
An appeal against the decision of delisting may be made to the SEBI.

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