CS Pooja (Company Secretary) 08 April 2010

Listing Agreement

Dear Members

Listing Agreement has recently been amended, and hence it is said that the same is applicable to all the listed companies.

My question is- when listing is an agreement between the company and the Stock Exchange, then how one party can amend the agreement, without taking the consent of the other party (i.e. the company) in written.

When a company is listed, then it signs an agreement with the respective Stock Exchange. Any amendments, (whether or not authorized by law) has to be communicated to the other party and either an amended agreement should be signed as a part of the procedure, or the other party should send its consent in writing accepting the amended terms and conditions.

I read the listing agreement, but I could not find such term saying that the agreement is subject to amendments made by SEBI from time to time.

It is against Contract Act. Isn’t it?

I know I am wrong, but want to know where…..

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3 Replies

Daksh (Student) 08 April 2010

Dear Pooja,

Like in the case of any Company its MOA/Articles contains the constitution the affairs of any Stock Exchange are governed through the Statutory Authority/ies NSE (which obviously comes within the perview of the concerned Ministry).

Hence in the instant circumstances if in case in view of the direction by NSE any stock exchange directs the changes in the listing agreement the same are obviously correct, genuine, having binding effect and are enforceable as such.

Best Regards

Daksh

Suresh CSLLM (Service) 08 April 2010

Listing agreement (LA) with Stock Exchange (SE) is not like any commercial agreement. Its an agreement with backing of laws, refer Security Contract Regulation Act. Its mention in LA that a company can not cancel and company agrees to obey rule, procedures etc. of the SE.

Regarding the amendment in LA, SEBI first instruct to SE and then SE communicates to Company in reference to LA. SEBI is not directly dealing with any Company. SE is governed by SEBI under separate rules/laws.

Kuljit Pal Singh (Legal Professional) 08 April 2010

Dear Friend,

It is like this way that the law is binding on the parties from time to time as per the amendments takes place, so it is the law which make the other party binding and not the agreement only.

Regards