Order in the matter of Delisting of Equity Shares of Vishva Vishal Engineering Ltd.

WTM/GM/CFD/CMD1/46/2020-21
SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
UNDER SECTION 11(1) AND 11 B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH REGULATION 25A OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (DELISTING OF EQUITY SHARES) REGULATIONS, 2009.
IN THE MATTER OF DELISTING OF EQUITY SHARES OF VISHVA VISHAL ENGINEERING LTD.

Background -

1. Vishva Vishal Engineering Limited (“VVEL” / “Applicant” / “the company”) is a public limited company incorporated in March 1985. Its equity shares got listed at BSE Ltd. (“BSE”) during the financial year 1985-86.

2. Securities and Exchange Board of India (“SEBI”) received an application dated May 05, 2020 (“Application”) under Regulation 25A of the SEBI (Delisting of Equity Shares) Regulations, 2009 (“Delisting Regulations”) from VVEL seeking exemption / relaxation from the requirements of complying with the minimum public shareholding norms (“MPS norms”) and the dematerialization of promoters’ shareholding, so as to enable the company to make an application for voluntary delisting and to follow the norms as provided under regulation 7 of the Delisting Regulations.

3. Vide the Application and subsequent submissions, the company has cited inter alia the following grounds for seeking the 

(a) Since IPO in the year 1985-86, no further shares have been issued to the public.

(b) After the year 1994-95, there was no trading in the shares of the company on the stock exchange.

(c) From 1995-96, the paid-up capital of the company consists of 25 Lakh shares of Rs.10 each. There has been no increase in the same since then.

(d) In the year 2001, the total public shareholding of 4.44% held by 13 public shareholders was purchased by the promoter group. Since then, (i.e. from the year 2001-02), 100% holding of the company is with the promoters and promoter group companies.

(e) Since 19.05.2004, trading in the shares of the company has been suspended by the Stock Exchange (BSE) due to non-compliances of certain provisions of Listing Agreement.

(f) Prior to suspension of trading, the scrip was traded for only six days during 1994-95 and it was last traded on 31.12.1994.

(g) No investor complaint has ever been filed against the company.

(h) SEBI had passed an interim order dated 04.06.2013 (Interim Order) against 105 entities, including the company, for non-compliance of the MPS norms prescribed under Rule 19A of the SCRR. The company came to know about such rule only on receipt of the interim order. Pursuant to the interim order, the company vide letter dated 26.06.2013 had inter alia submitted to SEBI that it wished to opt for delisting. Subsequently, the company had initiated efforts to follow the procedure and process for delisting of shares from BSE. Accordingly, in response to letters dated 21.08.2013 and 06.09.2013 regarding compliance requirements under Clauses 35 and 41 respectively of the Listing Agreement, the company vide letters dated 03.10.2013 and 04.10.2013 inter alia intimated BSE that it had already opted for delisting. Further, during the personal hearing before SEBI on 10.08.2015 which was held pursuant to passing of the interim order, the company had submitted before SEBI that it was not practically possible for the company to comply with the MPS norms through any of the different methods prescribed by SEBI and that it was desirous of delisting shares from BSE. It had further submitted that it had already initiated the process of delisting and appointed professionals to handle the matter.

(i) The company was regularly in communication with BSE for completing pending compliance requirements and filed requisite documents / certificates with it, apart from paying pending Annual listing fees up to FY 2015-16. It is pertinent to note that BSE vide Notice dated 25.10.2019 informed its members that no further action would be taken against certain entities, including the company, which had complied with the requirement of payment of outstanding annual listing fees and would continue to deal in Trade for Trade segment / under suspension.

(j) With regard to various methods for complying with the MPS requirements prescribed by SEBI inter alia vide Circular No. CIR/CFD/DIL/10/2010 dated 16.12.2010 and various subsequent amendments, the company submits that it is practically not viable for the company to comply with the MPS norms by any method prescribed by SEBI due to various reasons, such as (i) suspension of trading in the company’s shares since 19.05.2004; (ii) absence of trading in the scrip since 13.12.1994; and (iii) absence of public’s interest in acquiring the shares of the company in last many years.

(k) Due to the above reasons, the company is not in a position to reduce the promoters’ shareholding from 100% to 75% to comply with the MPS norms. Further, the promoters intend to voluntarily delist the company in accordance with the provisions of Delisting Regulations without being subjected to penal consequences as applicable in case of compulsory delisting.

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