Delisting of Securities from the Cyprus Stock Exchange

Introduction

In the dynamic world of financial markets, the listing and delisting of securities on stock exchanges is a natural part of the evolving landscape. One such instance is the delisting of securities from the Cyprus Stock Exchange (the “CSE”), a process that involves the removal of a company’s securities from trading on the exchange. Delisting can be driven by various reasons, including strategic business decisions, regulatory changes, or shifts in the company’s financial health. This article delves into the intricacies of the delisting process from the CSE, its implications and the factors that contribute to this significant corporate event.

Understanding Delisting

Delisting refers to the removal of a company’s securities from trading on a stock exchange, making them no longer available for public trading. This process alters the status of the company from being a publicly traded entity to a privately held one. Delisting can occur voluntarily or involuntarily, depending on the circumstances surrounding the decision.

Reasons for Delisting

1. Strategic Decisions: Companies may opt for delisting as part of a strategic business decision. This could include a desire to reduce the costs associated with being a publicly traded company, regain privacy in financial matters, or focus on long-term goals without the pressures of quarterly reporting and market volatility.
2. Financial Distress: Companies facing financial challenges might face involuntary delisting due to failure to meet listing requirements, such as minimum market capitalization or share price thresholds.
3. Merger and Acquisition Activities: Companies undergoing mergers or acquisitions may choose to delist if they are merging with a privately held company or if the acquisition takes the company private.
4. Regulatory Issues: Changes in regulatory requirements can force a company to delist if it no longer complies with the exchange’s rules.
5. Lack of Interest: If a company’s securities are thinly traded and there is minimal investor interest, it may consider delisting to avoid the costs associated with public trading.

The Delisting Process

The delisting process is governed by the Directive CSE 01 of 2015 regarding the delisting of securities from the Cyprus Stock Exchange following an application by the issuer (the “Directive”). In accordance with the Directive an issuer may submit an application to the Council of the CSE for the delisting of its securities from the stock exchange in one of the following ways:

1. upon completion of the exercise of the right of acquisition in accordance with Article 36 of the Public Takeover Bids for the Acquisition of Securities of Companies and Related Matters, as amended (the “Takeover Bids Law”); or
2. in the event of a public offer when the proposer has acquired or holds, following the acceptance of the public offer, a percentage exceeding ninety percent (90%) of the total voting rights of the issuer, and has informed about the intention to delist the securities in the document of the public offer provided for in Article 19 of the Takeover Bids Law; or
3. upon the approval of a resolution at a General Meeting for the delisting of the securities, for which:
   1. notice is given at least twenty-one (21) days in advance and specifies the intention of the resolution to be approved in accordance with the provisions of the Directive, and
   2. the relevant notice is accompanied by a Memorandum, which is approved by at least ninety percent (90%) of the attending members which have a right to vote, or
4. upon obtaining approval from the Cyprus Securities and Exchange Commission (“CySEC”) for the conversion of the issuer, either into a collective investment organization in securities or into an alternative investment organization, in the form of an investment company, and, in the process of conversion, the issuer has secured a resolution at a General Meeting, for which notice is given as for a special resolution, for the delisting of the securities with a percentage of at least seventy-five percent (75%) of the attending members which have a right to vote.

The Council of the CSE is required, within one (1) month from the date of submission of the complete and duly filled application, to make a decision regarding the delisting of the securities of the issuer from the stock exchange. The decision of the Council, is communicated to the issuer and CySEC, and is posted on the website of the CSE.

Conclusion

The delisting of securities from the CSE represents a strategic decision that companies make for various reasons, including shifting business priorities, financial considerations, or regulatory changes. The delisting process involves careful planning, approvals from regulatory bodies and shareholders, and a comprehensive communication strategy to inform shareholders of the company’s decision and its implications.