BSE’s move towards evacuating suspended scrips from its Trading Platform

On completion of 140 years of operations, BSE in its endeavor to make the capital markets more investor friendly and to ensure suitable exit opportunities for the investors, who have made investments long time back in the Companies which are presently suspended, has made a proposal to Capital Market Regulator, SEBI for compulsory delisting of more than 1,000 companies which have been suspended for more than seven years for various penal reasons.

Accordingly, SEBI, in the interest of stakeholders at large, might favour delisting of such companies which have not shown any interest in getting their suspension revoked during last 7 years, by complying with the listing agreement requirements.

To give effect to this proposed compulsory delisting, BSE is planning to issue notices to these companies to give them last opportunity to complete the formalities for revocation of their suspension within three months. Upon failing to respond to the same, BSE would proceed with the compulsory delisting process from the main board by giving necessary notices to the market and issuing public notices in newspapers for the benefit of investors and other stakeholders.

Consequently, the said delisted companies might be transferred from the Main Board to the Dissemination Board with the sole objective to give an opportunity to the investors to sell their shares back to the Promoters/Company.

In view of the above proposal of BSE, it is pertinent to understand the repercussions of compulsory delisting on the Company, its whole time directors and its promoters. In terms of SEBI Delisting Regulations, companies that are compulsorily delisted, such Companies along with their whole time directors and their promoters and the Companies which are promoted by any of them shall be debarred to, directly or indirectly, access the securities market or seek listing for any equity shares for a period of ten years.

Thus, the decision to revive the listing of the Companies is required to be taken by the Companies/ their Promoters & Directors on analyzing the severe consequences that will follow from such compulsory delisting.

CP’s Viewpoint:

In our view point, for the reason of the severe repercussions that tag along with a compulsory delisting, it is advisable for the suspended Companies to approach the Bourse and have their suspensions revoked.