Having decided to de-list over a dozen defaulting firms, the Karachi Stock Exchange (KSE) has decided not to allow listing to a company which is an associate of a defaulted company.
Tuesday saw the front regulators at KSE deciding to de-list some 18 companies from the Exchange for their continuous failure to rectify the defaults or opt for voluntary delisting through buy-back of shares from the minority shareholders.
The de-listed firms are: Accord Textiles, Amin Spinning Mills, AMZ Ventures, Dadabhoy Insurance Company, Fawad Textile Mills, First Islamic Modaraba, Harum Textile Mills, Indus Fruit Products, Ittefaq Textile Mills, Kashmir Polytex, Macdonald Layton and Co, Mian Muahhamd Sugar Mills, Mubarik Dairies, Sahrish Textile Mills, Shahpur Textile Mills, Ittefaq General Insurance Company, Union Insurance Company and Zahur Textile Mills.
These firms, the KSE said, were not only posing a “serious threat” to the development of capital market, but also inhibiting the investor confidence through lack of transparency.
Such companies had also deprived the minority investors of any return on investment, warned the regulator.
“The Exchange considering the interest of the stakeholders has decided to de-list these companies from the Exchange,” the KSE said.
One of the major defaults these firms committed is the non-payment of the listing fee of the Exchange that, accumulatively, amounts to over Rs 7.766 million.
The KSE Tuesday said the Exchange initiated action against the non-compliant companies, which have been in default of various provisions of the listing regulations particularly non-holding of Annual General Meeting for more than two years and non-payment of the dues of the Exchange.
The Exchange, it said, had advised these companies vide notices issued on February 10 and 15 (2012) to rectify these defaults within 90 days in accordance with the listing regulations and/or opt for the option of voluntary delisting through buy-back of shares of the minority shareholders by the sponsors/majority shareholders in accordance with the regulation.
The Exchange also forwarded the copies of the notices to the companies concerned on their addressed available with the Exchange.
On failure of the companies to rectify the defaults within the stipulated time, the KSE again issued notice on May 15 to such companies, allowing further 30 days to rectify the defaults. The companies were also notified the action of delisting of companies from the Exchange under the regulations.
The notice was also served through the newspapers on May 17 providing the companies, the opportunity of being heard and/or submitting the objection, if any, to the delisting in writing to the Exchange by June 14.
“It is regretted that the companies failed to respond/rectify the defaults and/or opt for voluntary delisting through buy-back of shares from the minority shareholders,” the regulator said.
The cases of the companies have been forwarded to the Securities and Exchange Commission of Pakistan (SECP) for initiating necessary action against them under provisions of the Companies Ordinance, 1984.
The KSE has also decided that in future no company associated with defaulted firm would be allowed listing.
Further, the regulator also suspended trading the shares of two firms, National Asset Leasing Corporation and Adil Textile Mills, for their failure to rectify the cause of suspension of trading in their trading.
