The Karachi Stock Exchange issued suspension orders of trading in shares of four companies on Friday, making a tally of 12 companies disallowed from trading so far this year.
The period of suspension was extended to a further 60 days of the following companies: Indus Polyester Company; Tariq Cotton Mills, Pak Fibre Industries and Long Term Venture Capital Modaraba.
A dozen companies were suspended last year and seven the year before. From August 1988, since the process began, the bourse has put trading of 74 companies on the hold until they ‘remove the cause of suspension.’
Some investors complain that the exit route for delinquent companies runs the familiar course: placing them on the defaulters’ counter, suspension and finally delisting.
The defaulters’ counter had been set up years ago so as to put to shame companies that do not comply with regulations, pertaining mainly to small investors’ rights. The action has met with success in varying degrees.
The KSE has continued to justify suspension and even delisting of companies as entirely in public interest. In the suspension notices issued on Friday, the Exchange stated that the step was taken ‘in the interest of trade and public and in exercise of the powers vested under listing Regulation No 5(2)(iii) read with section 9(7) of the Securities & Exchange Ordinance, 1969.’
The bourse also moves to suspend those companies, which go into liquidation.
Small shareholders, naturally, lament the loss of their investment in such companies. Liquidation of companies is not an ideal situation for shareholders, for as owners in the equity, they stand last in the row, after all interests such as debts due to banks, sums owed to creditors and employee compensations were satisfied. That almost leaves nothing for the shareholders.
But an official halt to trading of shares in such companies seeks to protect new unsuspecting investors: ‘If such companies remain listed, new investors, not knowing their current poor status, could dabble in those stocks and eventually find themselves trapped,’ a KSE official observed.
There is no law right now to confiscate the property, such as land, building and machinery of the delinquent companies and distribute proceeds from the sale among various interests, including small shareholders.
An investor, who had bought stock of a textile mill at the price of Rs22 for a 10 rupee share on the prospect and promise of bright future, ended up holding the share now carrying dirt cheap price of 10 paisa a piece. ‘If there is no law to seize property of such companies one needs to be enacted,’ grumbles this investor. (Dawn Report)
The period of suspension was extended to a further 60 days of the following companies: Indus Polyester Company; Tariq Cotton Mills, Pak Fibre Industries and Long Term Venture Capital Modaraba.
A dozen companies were suspended last year and seven the year before. From August 1988, since the process began, the bourse has put trading of 74 companies on the hold until they ‘remove the cause of suspension.’
Some investors complain that the exit route for delinquent companies runs the familiar course: placing them on the defaulters’ counter, suspension and finally delisting.
The defaulters’ counter had been set up years ago so as to put to shame companies that do not comply with regulations, pertaining mainly to small investors’ rights. The action has met with success in varying degrees.
The KSE has continued to justify suspension and even delisting of companies as entirely in public interest. In the suspension notices issued on Friday, the Exchange stated that the step was taken ‘in the interest of trade and public and in exercise of the powers vested under listing Regulation No 5(2)(iii) read with section 9(7) of the Securities & Exchange Ordinance, 1969.’
The bourse also moves to suspend those companies, which go into liquidation.
Small shareholders, naturally, lament the loss of their investment in such companies. Liquidation of companies is not an ideal situation for shareholders, for as owners in the equity, they stand last in the row, after all interests such as debts due to banks, sums owed to creditors and employee compensations were satisfied. That almost leaves nothing for the shareholders.
But an official halt to trading of shares in such companies seeks to protect new unsuspecting investors: ‘If such companies remain listed, new investors, not knowing their current poor status, could dabble in those stocks and eventually find themselves trapped,’ a KSE official observed.
There is no law right now to confiscate the property, such as land, building and machinery of the delinquent companies and distribute proceeds from the sale among various interests, including small shareholders.
An investor, who had bought stock of a textile mill at the price of Rs22 for a 10 rupee share on the prospect and promise of bright future, ended up holding the share now carrying dirt cheap price of 10 paisa a piece. ‘If there is no law to seize property of such companies one needs to be enacted,’ grumbles this investor. (Dawn Report)
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