Delisting in India

Abstract

Globalisation has made it mandatory for countries to have an advanced market-based financial system with highly functioning equity markets and stock exchanges as catalyst for economic growth. Markets, being self-functioning entities, are expected to regulate the actions of the market players, by instilling market discipline through ex ante regulations. However, on the basis of previous experiences of financial market scams, an amalgam of market discipline and regulatory discipline is being followed worldwide. Regulatory intervention in the market involves stringent compliance-based regulations and corporate governance frameworks, which are aimed at ensuring safe and fair transactions. Compliance with these regulations is intricately linked with stock exchanges as continuous compliance with regulations is a necessary precondition for companies to be listed on an exchange, and non-compliance is punished by exchanges. Sometimes the cost of complying with these regulations often outweighs the benefits accrued from raising finance through stock exchanges. This, amongst many other reasons, propels companies to delist their securities from stock exchanges....