In a recent move, BSE on the strict call of SEBI has made a decision to delist as many as 200 companies in which the trading has remained suspended since a decade. So, how it shall impact investors or shareholders in the process? Will it be favourable or against shareholders?
Herr's a quick take on this:
Why delisting or in the other case trading in company stock is suspended?
To protect the interest of public shareholders, the capital market regulator from time to time carries out scrutiny and in case when unscrupulous practice is determined, such a move is enacted. As for in the last month's Sebi attempt which revoked trading in as many as 331 companies on the notion that these companies were operating as shell firms.
These companies are put under special grade grievance mechanism of the market watchdog and only a monthly trading is allowed in it with extra payment as deposit money. So irregularities of any nature can and may be the prime reason of a company's delisting or scrip trading suspension.
How it impacts shareholders?
Upon delisting, shareholders get their fair value as the SEBI directs promoters of these companies to purchase held or outstanding shares from the general public on the price determined by the valuer appointed by the exchange. So, the investors gain as they are able to plough back their funds in the shares of these companies.
For the company, as determined by the exchange, such delisted companies are restricted to access the securities market for a period of ten years from the date of compulsory delisted. Also, these companies are moved to the dissemination board of the exchange for a span of 5 years as suggested by the SEBI.