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CS Executive · Capital Market and Securities Laws · Listing Obligations and Disclosure Requirements

Kaveri Foods Ltd lists its securities after applying to the Mumbai exchange. A shareholder asks how the SCRA links the exchange's listing agreement to the issuer's conduct. Which statement is correct under Section 21?

Section 21 of the SCRA binds the person on whose application securities are listed to comply with the conditions of the listing agreement with that recognised stock exchange. Compliance is a statutory duty, not optional and not dependent on the company's articles.

  1. AThe issuer is bound to comply with the listing agreement's conditions only if its articles so provide
  2. BCompliance with the listing agreement is optional once the securities are listed
  3. COnly the stock exchange, not the issuer, is bound by the listing agreement
  4. DThe person who applied for listing must comply with the listing agreement conditions of that exchangeCorrect

Explanation

Section 21 places the duty directly on the person on whose application securities are listed, requiring compliance with the listing agreement conditions of that exchange. It is not optional and does not depend on the articles. Saying only the exchange is bound reverses the duty.

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