Getting advantages of listing a security comes with its own set of cost and compliance requirements, which if not complied with calls for a stricter action by the exchanges and SEBI. And in similar stance, some 9 firms will see suspension of trading in them as some of the listing requirements by these entities have not been complied with within the timeline allowed for.
LODR or Listing Obligations and Disclosure Requirements is one such framework that needs to be adhered to by listed companies as per which companies need to make financial disclosures while also paying the requisite charges against them as fine etc.
Some of the nine companies that will see suspension of trading activity include stocks such as Amtek Auto, Gitanjali Gems etc.
Shareholders should use exit call
Now investors or shareholders in such stocks shall more appropriately use the exit strategy. Though, saying will be far easy as against actually implementing it because the share prices of such stocks that did not adhere to the regulatory measures will be far lower and so shareholders will look at a wait call to find a better price to exit such a stock.
Even in a case when such companies do comply and get again available for trading, investors might get a better short term price, but it shall be at best to exit such a stock all together as these stocks have corporate governance issues for long.
Also, the decision in all likelihood should be taken well before the stock is not suspended as thereafter the off-market route will be only available for making the exits.
It is to be noted that after the suspension of trading in such stocks is done, trading will be available on a trade to trade to basis in Z group securities once every week to make exit calls. Nonetheless, the liquidity is low and so to make the exit can be a difficult way out using this platform.