Why do MNCs want to delist from India?

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EVERY INDIAN SHOULD DO THIS
AMARISH

These are MNCs which have always exploited developing nations. When they manipulate the balance sheets, the transparency of stock exchanges expose them. Then they try to get themselves listed.
If a shareholder refuses to part with shares, he is harassed to a great extent. Some techniques used to deprive him of shares have been enumerated by Gopinath giving examples of Philips and Digital. Many more are there such as Cadbury, Kodak etc.
What is not mentioned is the harassment in delaying the dividend and not sending Annual report. Such examples are Xerox, Carrier, Eserve, Otis, Organon etc.
Neither Indian laws written to handle these nor the machinery ( like MCA, Company Law board, SEBI and Courts etc.) capable of delivering justice at right time and right cost.

There is also the simple matter of starting to generate losses. Suddenly a good company in a good business starts to generate losses even when other companies in the same business are doing exceedingly well. As prices fall due to bad fundamentals, even long term shareholders begin to start selling.
Then at a fairly low price the parent comes out with a good offer and delists. Subsequently, definitely the company becomes profitable again, but that's no longer known since its now no longer disclosed.

You are lucky my friend that you are still holding on to Rayban. There are more companies which then indulge in a unique scheme called Capital Reduction wherein ur shares will be cancelled at a pre approved price. Once the Foreign Promoter acquires 90+% and still the residual shareholders are unrelenting, there are mamy ways which co. employes to throw them out

Capital Reduction:

One fine morning company decides to reduces its capital by twice the shares held by non promoters. The company cancels all o/s shares of non-promoters and a similar qty of shares of promoters. After cancellation the promoter now holds 100%. Needless to say price fixed way below the instrinsic valuation. Eg; John Fowler India.

Buyback:

This is one more way to taking the money out of India. There is no dividend for the next few years. The company starts a buyback. Unlike the earlier buyback here the promoter can also participate. The unrelenting shareholder dont give their shares and the promoter gives in to the company and the cash from Co. goes to the foreign promoter. Eg: Philips.

Scheme of Amalgamation and conversion of Equity Shares to Redeemable Pref shares:

Eicher Ltd adopted this novel method. A scheme of arrangement is announced and co is merged. However in new co instead of equity shares, Pref shares are issued which are redeemable.

Increase in face value:

This is by far the simple method which doesnt need any court sanction and is an efficient way of throwing shareholder. The face value of share goes up from Rs 10 to Rs 25000 and if are holding some 1000 shares it becomes a fraction share and you are paid off. This was used by Digital Equipment to throw out the remaining shareholders.

The co law is outdated on all these issues and needs to be changed.

MNC ONLY INTERESTED IN TAKING PROFITS BACK HOME .ONCE DELISTED NO QUESTIONS AT AGM.PROFITS EARNED IN INDIA NEEDS TO BE SHARED WITH INDIAN PUBLIC.INDIRA GANDHI MADE COMPULSORY DILUTION IN MNC.THE PRESENT POLICY BRINGS IN EAST INDIA COMPANIES THROUGH THE BACKDOOR.BAN DELISTING.

This is indeed a very informative article & really the need of the hour.

I hold few hundred shares of Rayban Sun Optics India Ltd. The company got delisted from all the stock exchanges in Inida before few years. The promoters Luxottica group of Italy now holds more than 93 % equity of this company. Recently, through their annual report, they announce an offer at the rate of 137 per share to acquire the remaining 6.68 percent shares lying with non promoter shareholders. This offer is yet to be approved by the shareholders & Hon. High Court. I am basically a very long term investor. I have been holding shares of Rayban Sun Optics India Ltd. since last 10 years. Five year down the line I see a very great future of this company in India looking at their world class brand portfolio & rising income & spending level of Indian youth for luxury lifestyle products. When the time became ripe for real wealth creation & taking the maximum benifit, the company came up with an buyback offer at a nominal price which is even Rs.43 lesser than the last buyback offer which was made at Rs. 180 per share before few years !

I have now 4 questions :

1..

If this offer is approved by all the required entities, do I have a compulsion to surrender my shares ?

2..

Can I still hold my shares even if the rest of all the shareholders surrender their shares & exit completely ?

3..

Can I get all the corporate benifits like dividend, bonus, annual report, etc. even if I am the only non promoter shareholder left in this company ?

4..

Is there any exit option post the successful completion of this offer in future after 3 to 5 years ? How the 'Fair Value' of company's share can be determined at that time ?

I will really appreciate if some expert comes forward & addresses to these queries which is in the interest of all the minority shareholders left in the MNC delisting offers.

Thank you very much.

Thanks for the info. Want to know more on the effects of delisting to retail investors of the company. especially looking for how an investor can get the value of his shares back after company is delisted? Will he continue receive the dividends from the company etc., thanks once again and look forward to your next articles on the subject.