More than 5 firms to delist from CSE
The new rules on minimum public float requirement by the Securities and Exchange Commission (SEC) have prompted many listed firms to delist from the Colombo Stock Exchange (CSE) in the coming months, industry sources said.
“More than five firms are discussing with their major shareholders and director boards to delist,” one industry source told the Business Times.
In January, listed companies were instructed to have a minimum public float of 20 per cent in the hands of a minimum of 750 public shareholders or a market capitalisation of Rs. 5 billion of a firm’s public holding in the hands of a minimum of 500 public shareholders whilst maintaining a public holding of 10 per cent. The source added that most firms which aren’t able to adhere to this want to move out of the stock market.
“Their eroding balance sheets are prompting them to delist,” the source added. The latest company to announce delisting is Asiri Central Hospitals, which announced this decision on Thursday to the CSE. This followed an announcement by loss-making Beruwala Walk Inn PLC on Monday seeking permission from the CSE to delist the company in a bid to turn-around the organization and return to profits have failed over the past few years. “The company has been reporting losses almost every year since the tsunami as the hotel was extensively damaged and rendered non-operational unless huge capital is injected to demolish and reconstruct the hotel”. Last month Kuruwita Textile Mills announced it was delisting for the same reasons as Beruwala Walk Inn.
The three companies said that they will take all necessary steps in accordance with the terms of the regulations issued by SEC pertaining to delisting of shares, including the convening of an Extra-Ordinary General Meeting of the shareholders to seek their approval.