Delisting Criteria
Regulation
31 of the Listing Regulations deals with delisting of companies.
Regulation
31(1) says a company may be delisted or suspended for any of the
following reasons:-
-
If
its securities are quoted below 50% of face value for a
continuous period of three years.
Provided that, if the
shares of the company quoted at 50% or above of the face value, then
such a rate is maintained for a continuous period of 30 working
days.
-
If
it has failed to declare dividend or bonus :-
-
For
five years from the date of declaration of last dividend or
bonus; or
-
In
the case of manufacturing companies, for five years from the
date of commencement of production; and
-
for
five years from the date of commencement of business in all
other cases.
c. If it has failed to hold its annual
general meeting for a continuous period of three years.
d. If it has gone into liquidation, either
voluntarily or under court order.
e. If it has failed to pay the annual listing fees
as prescribed in these regulations payable to the Exchange for
a period of two years or penalty imposed under these
regulations or any other dues payable to the Exchange.
f. If it has failed to comply with the
requirements of any of these regulations.
g. No company which has been delisted or suspended shall
be restored and its shares requoted until it removes the causes of
delisting/suspension and receives the assent of the Board for the
restoration.
Regulation
31(2) says that no company will delisted under the Listing
Regulations unless the company has been given an opportunity of
being heard.
Regulation 31-(A) to (F) of the Listing Regulations relate
to voluntary delisting.
31-A Voluntary de-listing of a
security:-
i) Any
company intending to seek voluntary de-listing from the Exchange shall
intimate to the Exchange, immediately, of the intention of the
majority security holders/sponsors to purchase all securities, without
exception, from all the security holders with the purpose to de-list
the security along with the reasons thereof. Such intimation shall
also include minimum price at which the securities are proposed to be
purchased.
Provided that the minimum purchase price
are proposed by the sponsors will be the highest of the benchmark
price based on any of the following:
a)
Current Market Price
b)
Weighted Average Market Price (Annualized)
c)
Break-up Value based on historical cost.
d)
Earnings Multiplier approach (for profitable companies)
e) The
maximum price at which the Sponsors had purchased these shares from
the open market in the preceding one year.
Explanation:
Break-up Value based on historical cost:
The Break-up Value is determined by dividing the shareholders' equity
by the total number of outstanding shares. This is the net asset value
(Total Assets-Total Liabilities) per share.
Earning Multiplier approach for
profitable commies)
Fair value = Estimated Earnings * P/E ratio.
This approach is based on the identity that a stock's current price is
the product of its actual earning per share and the P/E ratio. The P/E
ratio is , calculated by dividing the current price by the actual
earning per share. To determine the value of stock, both the earnings
and the P/E ratio will have to be estimated.
Price may be determined as a multiple of the P/E ratio of the related
sector as on the date of application for the voluntary buy-back of
shares. Earning per share
may be based on the latest audited accounts of the companies in that
sector or a weighted average earning per share of last 3 years of
those securities.
ii) The
final minimum purchase price of the securities to be de-listed shall
be fixed with the approval.of the Exchange.
At the same time the Exchange shall
determine the minimum percentage of securities to be purchased by
sponsors to qualify for de-listing and the same will be communicated
to the company.
iii) In
case of disagreement of sponsors on minimum percentage to be purchased
as determined by the Exchange, the sponsors will file an appeal with
the commission within 10 days of receipt of communication of such
determination under intimation to the Exchange. The decision taken by
the Commission will be final and binding.
The sponsors/majority shareholders shall
submit an undertaking that they will abide by these Regulations which
pertain to buy-back of shares/voluntary de-listing of securities.
iv) Until
the decision on the sponsors' offer for buy-back of shares is taken by
the Exchange or the commission, as the case may be, the sponsors will
not be allowed to withdraw their such offer.
31-B Voluntary de-listing of a
security shall be subject to the following: -
i)
Approval of the proposal in
general meeting of the company by not less than 3/4 of the security
holders present in person or by the proxy at such general meeting.
ii)
Compliance by the company with
the prescribed procedure, guidelines/criteria and other terms and
conditions may be laid down by the Exchange.
The Exchange may for any reason
whatsoever refuse to accept the proposal of the company, the purchase
price and/or the request to. de-list the securities.
31-C Procedure for voluntary
de-listing: -
i)
A formal application shall be
made by the company for de-listing supported by reasons thereof and
the proposed purchase price along with
non- refundable application fee of Rs.
100,000/- (Rupees One Hundred Thousand only) to be paid by the
sponsors.
ii)
On approval by the Exchange of
the application, the company shall call a general meeting of its
security holders and pass a special resolution approved by not less
than 3/4 of their number present at such meeting resolving that the
securities be de-listed on the terms stipulated by the Exchange.
iii)
A copy of special resolution
referred to above shall be, sent to the Exchange immediately along
with a complete list of' holders of the security held by the majority
security holders and others, their names/category, the number of
securities and addresses.
iv)
Together with the application
for de-listing, the company must submit an undertaking from a Purchase
Agent (who may be a commercial bank, or an investment bank or a member
of the Exchange) on behalf of the majority security holders which will
constitute an irrevocable open offer to purchase at the relevant
purchase price the securities from the other security holders. The
said offer to remain valid at least for a period of 60 days or as may
be fixed by the Exchange from the date of commencement of purchase.
The purchasing agent will provide a bank guarantee in an amount and
such format as is demanded by the Exchange to secure this obligation
and the. said bank guarantee will remain valid till at least 15 days
from the expiry date of the said open offer or when all outstanding
securities have been purchased by the majority security holders
whichever is earlier.
Provided that where a member of the
Exchange is appointed as Purchase Agent and the total buy-back amount
does not exceed Iis. 2.5 million, the requirement of bank guarantee
can be replaced with the undertaking of such member of the Exchange on
the prescribed format.
Provided further that in case of
appointment of purchase agent other than a member of the Exchange, all
trade shall be routed through a member of the Exchange.
Provided further that all the trades
during the initial period of 60 days will be conducted on ETS only
irrespective of marketable lot. The purchase agent will be required to
maintain a live bid in the system at the minimum purchase price
approved by the Exchange. The purchase price shall be based on market
forces, subject to minimum purchase price determined by the Exchange.
v) The
application for de-listing shall be supported by a written consent of
the purchase agent to act as agent for purchase of the securities to
be de-
listed on behalf of the majority
security holders as contemplated by these Regulations.
vi) The
company shall convey to all the holders securities other than majority
holders on their addresses available in the records of the company
through registered post the decision taken in their General Meeting to
purchase the securities together with a copy of the special resolution
and also publish a notice in this behalf duly approved by the Exchange
through two widely circulated newspapers including one of Islamabad.
a) Total
number of issued securities (with percentage)
b)
Securities owned by majority security holders before the offer (with
percentage)
c)
Securities bought under the offer (with percentage)
d) Total
securities currently owned by majority security holders (with
percentage)
e)
Securities still outstanding with majority holders (with percentage)
f) Amount
of Bank Guarantee required @ Rs. (the highest rate
offered through ETS during initial 60 days period) per outstanding
security.
vii)
a) With regard to the outstanding securities identified in para (e)
above, the sponsors shall continue to remain obliged to purchase the
same at the relevant price for period of 12 months from the day
following the expiry of initial buy-back period of 60 days and the
sponsors shall submit a bank guarantee in an amount and format
acceptable to the Exchange to secure such obligation.
Provided that the requirement of
submission of bank guarantee will not be applicable where a member of
the Exchange act as purchase agent on behalf of the sponsors. In such
a situation, the purchase agent will be required to submit an
undertaking in the format prescribed by the Exchange.
b) The company once allowed delisting
under these Regulations will not be allowed relisting of any of it's
securities which have been de-listed at least for a period of five
years from the date of delisting. However, the Exchange may allow, on
case to case basis, listing of such securities on Over-the Counter
(OTC) market.
31-D Time Frame
for Completion for Requirements
i)
The company shall within the business days of the
decision of its Board of Directors to de-list the securities, provide
intimation of such decision to the Exchange including a copy of the
relevant resolution passed in this regard.
ii)
Within one week of the aforementioned intimation,
the company will furnish its sponsors' undertaking to purchase the
securities owned by persons other than the sponsors at a purchase
price. On receipt of such undertaking, the Exchange shall be empowered
by the company within 15 days of the date of such request by the
Exchange.
iii) The
Board on its own or on the basis of recommendations of the Special
Committee, will determine/approve the purchase price. The decision of
the Board will be communicated to the sponsors/company and shall also
be notified and announced immediately.
Provided that any member of the Board and/or Special
Committee holding 2% or more shares of the company applying for
voluntary de-listing will not participate in the deliberations while
the case of the company is considered by the Board/Committee.
iv) The
sponsors will be required to convey their acceptance/refusal to the
purchase price approved by the Board within 7 days of conveying of the
relevant decision to them.
If the company wishes to appeal this decision to the
Commission it must do so within 10, days of the decision in which case
no further steps will betaken on the de-li�ting application until the
Commission determines the purchase price.
v) Once
the purchase price has been finalised either by determination by the
Commission in appeal or by the sponsors accepting the price stipulated
by the Exchange, the` company will be required to comply with the
following procedure: -
a) To
obtain approval of the proposal of voluntary de-listing in the general
meeting of the holders of the securities within 30 days of the
acceptance of sponsors.
b) After
approval of the general meeting, the requirements under Voluntary
Delisting Regulations shall be completed within 7 days of the general
meeting, to commence the purchase of shares.
c) The
sponsors will purchase the securities for a period of 60 days.
d) Upon
expiry of the said purchase period, the company will submit the
relevant documents/information to the Exchange within a period of 21
days:
e) After
receipt of the required documents/information and compliance of the
relevant requirements as stipulated by the Exchange, the securities
shall stand delisted after` a period of 30 days.
vi)
In case of non--acceptance of the price determined
by the Exchange as the purchase price, the company shall file an
appeal with the Commission within 10 days of the date of refusal for
determining the price under intimation to the Exchange. On finalising
the price by the Commission, the procedure as laid-down above will be
followed.
31-E
Relaxation of Rules:
Where the Exchange us satisfied that it is not practicable to
comply with any requirement of these Regulations in a particular case
or class of cases; the Exchange may, for any reason to be recorded,
relax such requirement subject to such conditions as it may deem fit.
31-F Penalty:
Whoever fails or refuses to comply with, or, contravenes any
provision of these Regulations, or knowingly and willfully authorizes or permits such failure, refusal or contravention shall, in addition
to any other liability under the Regulations, be also liable to fine
not exceeding two hundred thousand rupees for each default, and, in
case of continuous failure, refusal or contravention, to a further fine
not exceeding five thousand rupees for every day after the first
during which such contravention continues.
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Islamabad Stock Exchange