CS Executive · Capital Market and Securities Laws · Delisting of Equity Shares
Which of the following is a principal reason a promoter may choose to delist a listed company?
A principal reason is to reduce the compliance burden and cost of remaining listed and to give promoters greater control over the company. Delisting ends trading on the exchange and shrinks public shareholding, so it does not widen trading or increase shareholders.
- ATo avoid the need to hold any shares in the company
- BTo reduce the compliance burden and cost of being listed and gain greater control over the companyCorrect
- CTo make the shares freely tradable on more exchanges
- DTo increase the number of public shareholders
Explanation
Promoters usually delist to cut listing compliance costs and consolidate control. Delisting does not remove promoter shareholding, does not widen trading, and reduces rather than increases public shareholders.
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