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CS Professional · IFSCA - Regulations, Listing and Compliances · Listing and Issuance of Securities

Mahadev Textiles' securities were compulsorily delisted from a GIFT IFSC exchange for serious non-compliance. A director argues that the delisting automatically releases the company from all obligations to its security holders. Which view is correct?

Delisting only removes the securities from exchange trading. The company still owes its obligations to holders, and the regulator can still enforce penalties for earlier violations. Liability is neither extinguished nor transferred to the exchange.

  1. ADelisting extinguishes all liability of the company to holders
  2. BDelisting ends exchange trading but the company's obligations to holders, including exit or payment of dues, are not wiped out, and the regulator may still take enforcement actionCorrect
  3. CDelisting makes the securities freely transferable without any documentation
  4. DDelisting transfers liabilities to the exchange

Explanation

Delisting affects only the listing status. The issuer remains bound to its holders under the securities' terms, and regulatory enforcement for past violations survives. Liabilities do not move to the exchange.

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