NORMS AND PROCEDURE FOR DELISTING OF SECURITIES BY THE STOCK EXCHANGES

A NORMS

1. 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 capital
   • Market lot
   • Share price - very high, high, medium, low -
   • Market Capitalisation
   • SEBI’s 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 -

   1. 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

   2. 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 requirements.

   2. The minimum trading level of shares of a company on the regional/other 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.

   3. Financial / Business Aspects :

   1. 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.

   2. 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.

   3. The company should have some tangible assets. It is therefore for consideration as to what value of assets the company should own in order to be listed / continuously listed.

   4. Track record 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 fees

   • Compliance with SEBI (Substantial Acquisition 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 practices in reporting earnings & financial position

   • Publishing half-yearly / yearly unaudited / audited results

   • Frequent changes in -

   Accounting year

   Share transfer agent

   Registered office

   Name

   5. Promoters’/ Directors’ track record especially with regard to insider trading, manipulation of share prices, unfair market practices, (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).

   6. 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 to remain in touch with the Exchange.

   7. 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.

   8. 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.

   B PROCEDURE

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

   1. Two directors / officers of the Exchange (one director to be a public representative);

   2. One representative of the investors;

   3. One representative from the Central Government (Department of Company Affairs) / Regional Director / Registrar of Companies;

   4. One representative from SEBI;

   5. Executive Director / Secretary of the Exchange

   2. 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.

   3. 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

   4. Notice of termination of the Listing Agreement to be given.

   5. An appeal against the decision of delisting may be made to the Central Government.