[ We express our sincere gratitude to Satyakam Misra for this very well researched article ] :-
No obligation to have its shares listed on the Stock Exchange
Law is open to everyone in the same way as the Ritz Hotel. If you have money, you get in. Rarely in history, have the shareholders ever coerced the company into listing. I don’t think such things are possible. We have seen that in case of Sistema which has seen consistent dilution of equity and preferential allotment of the shares to the promoters without listing. Sesa Industries is also another example.
The clause 40A of the listing agreement has been amended to incorporate the public float norms announced in June 2010 (as amended in August 2010), which require listed companies to maintain a public shareholding of 25%. I don’t think PNB finance has this level of public holding.
Companies desirous of getting their securities listed at BSE are required to enter into an agreement with BSE called the Listing Agreement, under which they are required to make certain disclosures and perform certain acts, failing which the company may face some disciplinary action, including suspension/delisting of securities.
Please be aware that there is no obligation on the part of the public limited Company to have its shares listed on the stock exchange. As held in the case of Raymonds Synthetics Ltd. V/s. Union of India, AIR 1992 SC 647, it is only if a Company intends to offer its shares to the public for subscription by issue of a prospectus that it must apply to the stock exchange for permission to list its shares in terms of section 73, before issuing such a prospectus.
Once a shareholder purchases shares of the Company the money becomes an asset of the Company and the shareholder has only the right to obtain dividend, be present at meetings, etc. The Director of the Company does not hold the monies in a fiduciary capacity and therefore he would not be entrusted with the authority over the same.
- Satyakam Misra
