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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Jumping off the sinking (Glass) Ship ?

Jumping off the sinking (Glass) Ship ?

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KDDND


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@smallville wrote:The above news in for India...

And if de-listing is the buzz word here, how much company will pay for share holders to buy back shares? It cant be less than 4 rite?

NAV. 3.67
I guess between 3.70 to 4.00
Y nt 4.20????
Let c
 monkey 

yaka


Manager - Equity Analytics
Manager - Equity Analytics
can someone explain me is it mandatory to delist here in SriLanka as well since delisting in india? coz what I think why they can't sell here and exit if they want...

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@malanp wrote:
@pushpakumara wrote:Whether Glass is delisted or not, curious to know whether anything call "delisting rules" as there are listing rules. If so where can we find it.

In case of a delisting what is the best cause of action for an existing share holder? Hold or sell your shares immediately?(By the time the company announces a delisting, share prices could have come down or people who knew about it before the event would have sold their stake). Of course a unrealistic reduction in price may lead to a take over bid.

After a delisting there could be a offer from company delisted, to buy shares from existing share holders. In this case who decides on the offer price? If it is determine by the company and the final offer price is unreasonable, can SEC or any other authority intervened?

This is just to get an idea in case something goes wrong.



 

Pushapakumara

Delisting of company shares is a wrong term, it is delisting of company name.

Delisting of company name from CSE is two step process.

First, the company has to buy its minority shares from the open market- the rules for this process is governed by the section 64 of the companies act 2007.

Secondly after buying all minority shares, the company has to apply from CSE for delisting of its name.  CSE or CDS does not delist individual shares they delist the company name.

the rights are obligations of minority shareholders are stipulated in the section 64.

Many thanks malanp for the useful information provided. As per the act company will determine the price based on the opinion of the company’s auditors on a " fair value". It further says company should not withhold any information which is detrimental to the decision of shareholders. whether to accept the offer or not. Presume I interpreted the meaning of the para in the section 64 correctly in relation to the matter.

Apart from the above, if a company wants its name be delisted, will it be based on sole discretion of board or should they seek majority vote of the shareholders? What I understood is, .its only sole discretion of the board, am I right?


Dileepa


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@pushpakumara wrote:
its only sole discretion of the board, am I right?
Generally Yes. But in this case they can not because BOI agreement is there.
Long story short, GLAS can not de-list till 2015.

Kithsiri


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
OK, that is clear now.
What would happened if shareholder does not agree to the offered price and wanted to hold on to his / her share/s ?
@Dileepa wrote:
@pushpakumara wrote:
its only sole discretion of the board, am I right?
Generally Yes. But in this case they can not because BOI agreement is there.
Long story short, GLAS can not de-list till 2015.

malanp


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
section 69 of the companies act says...

section 69.
(1) Where a share is redeemable on a specified
date —

a.the company shall redeem the share on that date;

b.the share is deemed to be cancelled on that date;
and
c.from that date, the former shareholder ranks as an
unsecured creditor of the company for the sum
payable on redemption.

only option shareholder has is taking a court order against the notice before the notice date expired.

After the notice date expired he deemed to have sold his shares to the company..

Kithsiri

Kithsiri
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Thanks @ Malanp.  Very Happy 

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@ malanp and Dileepa

Hats off to both of you for the brief and admire the knowledge you have on the subject. Many thanks.

@ Kithsiri

Thanks to you as well Kithsiri for bringing up the topic.



Last edited by pushpakumara on Fri Feb 14, 2014 5:22 am; edited 1 time in total (Reason for editing : addition)

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Don;t know about chances of GLAS delisting here so soon as Dileepa pointing out.

But a very good ( common) discussion came out of it.

As Malanp pointed out, I believe company can make an offer ( to their discretion based on some formula which I am sure takes the market price and assets into consideation ) and if share holder does not accept before deadline that person can be held high and dry

Need to read further the document/act and maybe Marlanp can disclore the share price determining part.

Also my observations on GLAS below

http://forum.srilankaequity.com/t32308p75-cse-in-2014-and-fundamental-shares-that-have-underperformed#193636

pushpakumara


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@slstock wrote:Don;t know about chances of GLAS delisting here so soon as Dileepa pointing out.

But a very good  ( common) discussion came out of it.  

As Malanp pointed out, I believe company can make an offer ( to their discretion based on some formula which I am sure takes the market price and assets into consideation )  and if share holder does not accept before deadline that person can be held high and dry

Need to read further  the document/act and maybe Marlanp can disclore the share price determining part.

Also my observations on GLAS below

http://forum.srilankaequity.com/t32308p75-cse-in-2014-and-fundamental-shares-that-have-underperformed#193636

With regard to price determining part, I presume there is no set or guided formula for this and it is on sole discretion of the management. If that is the case, I think it is a weakness in the system as company is always try to buy back at lower levels and not in favour of shareholders. Over to your malanp if you have time to enlighten us on the matter.

malanp


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@slstock wrote:Don;t know about chances of GLAS delisting here so soon as Dileepa pointing out.

But a very good  ( common) discussion came out of it.  

As Malanp pointed out, I believe company can make an offer ( to their discretion based on some formula which I am sure takes the market price and assets into consideation )  and if share holder does not accept before deadline that person can be held high and dry

Need to read further  the document/act and maybe Marlanp can disclore the share price determining part.

Also my observations on GLAS below

http://forum.srilankaequity.com/t32308p75-cse-in-2014-and-fundamental-shares-that-have-underperformed#193636

Sls

There is no specific price formula mentioned in the law but the section 66 says how to arrive at the share price.

..." for a consideration that is SPECIDIED or TO BE CALCULATED BY REFERENECE TO A FORMULA or REQUIRED TO BE FIXED BY A SUITABLY QUALIFIED PERSON who is not associated with or interested in the company"

then section 64 says the procedure to be followed..
...."the consideration to be paid for the shares is in the opinion of the company’s auditors a fair value"

That means after deciding the share price under section 66, the auditors has to certify that it is a fair value.

After that the company can notice the public along with the auditors certificate that they are going to buy back shares at XXX price, on this date.. and after that date share holders will become creditors and company will pay the value to the shareholder.

In a share buying back case shareholders have very limited options.

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Thank you for further clarifications which should make the points clear.

And yes of course, the company concerned should come up with the price/formula and a law cannot state such .

Maybe I was not clear when I said "to their discretion based on some formula which I am sure takes the market price and assets into consideation "

I would expect delisting companies to "more" than a fair price compared to market.

Anyway, logically GLAS should not be in such danger immediately.

There are few other companies that can get delisted : CDIC, CARDS group palm oil companies ( INDO, SHAL , GOOD etc ) and some family held companies who does not want to sell shares to public.

I am yet to see SFCL and ASPM trade though listed at CSE.

Also few other illquid companies serious delist or increase illquidly. SWAD , OFEQ comes to mind to start with.


@malanp wrote:
@slstock wrote:Don;t know about chances of GLAS delisting here so soon as Dileepa pointing out.

But a very good  ( common) discussion came out of it.  

As Malanp pointed out, I believe company can make an offer ( to their discretion based on some formula which I am sure takes the market price and assets into consideation )  and if share holder does not accept before deadline that person can be held high and dry

Need to read further  the document/act and maybe Marlanp can disclore the share price determining part.

Also my observations on GLAS below

http://forum.srilankaequity.com/t32308p75-cse-in-2014-and-fundamental-shares-that-have-underperformed#193636

Sls

There is no specific price formula mentioned in the law but the section 66 says how to arrive at the share price.

..." for a consideration that is SPECIDIED or TO BE CALCULATED BY REFERENECE TO A FORMULA or REQUIRED TO BE FIXED BY A SUITABLY QUALIFIED PERSON who is not associated with or interested in the company"

then section 64 says the procedure to be followed..
...."the consideration to be paid for the shares is in the opinion of the company’s auditors a fair value"

That means after deciding the share price under section 66, the auditors has to certify that it is a fair value.

After that the company can notice the public along with the auditors certificate that they are going to buy back shares at XXX price, on this date.. and after that date share holders will become creditors and company will pay the value to the shareholder.

In a share buying back case shareholders have very limited options.

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