abhishreshthaa
Abhijeet S
LISTING AGREEMENT
WHAT IS LISTING?
Admission of securities of an issuer to trading privileges on a stock exchange through a formal agreement.
Prime objective is to provide liquidity and marketability AND to provide a mechanism for effective management of trading.
Advantages of Listing
- A Premier Market place
- Visibility
- Unprecedented reach
- Modern infrastructure
- Transaction speed
- Short settlement cycles
- Broadcast of corporate announcements
- Trade statistics for listed companies
- Investor service centers
- Nominal listing fees
Procedure of Listing
*
- Initial Discussions
- Approval of Memorandum and Articles of Association
- Approval of draft prospectus
- Submission of Application
- For Issuers listing on SE for the first time
- Listing of further Issues by Issuers already listed on SE
- Listing Fees
- Security deposit (for new & fresh issues and when SE is the Regional Stock Exchange)
- Supporting documents
- Listing conditions and requirements
CRITERIA for Listing
- For Knowledge Based Companies
- IPO by Companies
- Securities of Existing Companies
Listing Agreement
Main Clauses
What is an Listing Agreement?
It is an agreement which a company has to enter into with the stock exchange if it wishes to list its securities on the said exchange.
Company should
- Letter of allotment to be issued simultaneously with the issue of letter of regret.
- Issue certificates within one month of date of lodgment for transfer, sub division, consolidation, renewal, exchange or endorsement signed by a responsible official.
- Issue new certificates in replacement of those which are lost within 6 weeks of notification of loss.
- Company should issue lots of securities in denomination of 1,5,10 & 50 if they are not in market units of trading.
Company shouldn’t charge for
- Registration of transfers of its shares and debentures
- For sub divisions
- For issue of new certificates in replacement of those which are old or worn out or where the cages on the reverse of recording transfers have been fully utilized.
- For registration of any power of attorney, probate, letters of administration or similar other documents.
Company should not charge any fees exceeding those agreed upon with the exchange for
- Issue of new certificates in replacement of those that are torn, defaced, lost or destroyed.
- For sub division and consolidation of share and debenture certificate.
Company to register transfer of securities except….
When the transferee is, in exceptional circumstances not approved by board of directors in accordance with AOA. President of the SE should also be taken in confidence for the same.
When any statutory prohibition of competent authority restrains the company from transferring the security out of the name of transferor
Company should
- Not close the transfer books on such days that are inconvenient to the Exchange for purpose of settlement of transactions.
- Notify SE at least 42 days in advance of closing the transfer books or fixing record date.
- Minimum gap between the two book closures or records would be at least 30 days.
Company should intimate SE
- At least 7 days prior to a board meeting.
- In case of the proposal for declaration of bonus is communicated to the BOD of the company as a part of agenda papers.
- Within 15 minutes of closure of Board meeting – all cash dividends and cash bonuses recommended/ Accounts figures/ Decision of buy
back of shares/ Short particulars about increase or decrease in capital.
Following documents to furnished to enable the SE to admit the company
- A copy of acknowledgement card or letter indicating the observations of the draft prospectus by SEBI.
- A certificate of merchant banker acting as a lead manager to the issue reporting positive compliance by the company of the guidelines on disclosure and investor protection issued by SEBI.
- If these documents are not submitted or the acknowledgments are windrowed at a later date the security will not be eligible for listing and the company may have to refund all subscription monies to the respective investors immediately.
The company should promptly notify the SE if
- There is a proposed change in the general character or nature of its business.
- Change in Company’s directorate by death, resignation or removal.
- Change in MD, Managing agents, or Secretaries & Treasurers.
- Change in auditors.
Company should forward SE promptly without application
- 6 copies- Statutory and directors report, Balance Sheets and P&L accounts, all periodicals and special reports as soon as they are issued.
- 6 copies- notices, resolutions, circulars, relating to capital prior to their dispatch to share holders.
- Copy of proceedings at all annual and extraordinary general meetings of the company.
- 3 copies- All notices, circulars etc issued or advertised in the press.
Disclosures In Annual report
- Related Party.
- Disclosure of loans/ advances & investments.
- If name of the company is changed after 1997 due to change in nature of business than the new businesses turnover and income should be mentioned separately.
- Promoter / Non Promoter Shareholding.
Company should inform SE about
- Strikes, lockouts, closure on account of power cuts etc.
- Change in general nature of the business.
- Disruption of business due to natural calamity.
- Commencement of commercial production/ commercial operations.
- Development with respect to pricing/ realization arising out of change in the regulatory framework.
- Litigation / dispute with material impact.
- Revisions in ratings.
- Any other information having bearing on the operation/ performance of the company as well as price sensitive information.
If company wants continued listing… It should!
- Pay annual listing fees on or before 30th April of every year.
- Maintain a minimum level of non promoter share holding.
- Comply with SEBI( Substantial Acquisition of Shares and Takeovers) Regulation, 1997.
- If company is taken over the new management shall comply with SEBI Regulations.
- Furnish un audited financial results on quarterly basis within 15 minutes of the closure of board meeting.
- Review report if there’s a large deviation between audited and un audited results.
ANNUAL AUDITED RESULTS
- No need to publish un-audited results of last quarter.
- Prescribed form: Figures for 9 months, last quarter, Corresponding quarter of the previous year, Audited figures of the current year, Audited figures of the previous year.
- Disclosure of audit qualifications along with the audited financial results.
OTHER DISCLOSURES
DIVIDENDS:
- Amount of Dividend distributed or proposed distinguishing between different classes of shares and Dividend per share also indicating nominal value per share.
- Where Dividend is paid or proposed pro-rata for shares allotted during the year, the date of allotment, number of shares allotted pro-rata amount of dividend per share and the aggregate amount of dividend paid or proposed on pro-rata basis.
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