I came across few companies like APIS India, Taparia Tools which are listed on the BSE but they do not get traded. They publish their results and do the announcements as well on the BSE site.
Why it is like that? And why the promoter has listed them on exchange.
I would not day that they do not get traded. Essentially, there are no sellers for these, and hence you do not see any volume. People who hold those shares, do not want to sell it, hence no trades on the platform.
That means there is no liquidity right,?
But why the promoters do not want the price of the stock to increase?
There would be some cap on promoter’s holding when any company goes public… further would be some time limit during which the transactions on bourses should happen…not able to confirm though.
Rishi’s point above seems to be logical & possibly explains why some companies do not get traded nor have volumes, altho they r listed. If listed companies default on trading regulations/norms such as timely payment of fees etc to the exchng, the exchange may take a call not to allow trading - in which case, public announcements are made from time to time for info of general investors/traders.
Reg the two companies cited here by Nithyanand, I have no info though.
Reg cap on promoter holding - link may be of use to folks on this thread.
Hope this helps.
i donot think that is the reason. See below Shareholding pattern of APIS India and Taparia Tools.
APIS India SHP Mar 17
Taparia Tools SHP MAr 17
Apologise if my earlier response was unclear. I have edited it now; hope its useful in its latest form.
I will agree on that point but why the companies are publishing the quarterly results on the BSE site then? If they have not paid the fees then it will not be mandatory for them to update their results,right?
In case of Taparia even the public shareholding is 30 %. But most of the shares are being held by relatives or known persons of promoters.
Taparia are maheshwari and by having a quick glance at public shareholding I found people /firms with name as Kabra, Mundra, Bangur and Taparia. These all surname belongs to Maheshwari community. So these are relatives or known people who might not be willing to loose any share. This is just a thought when I went through the public holding.
There could be many reasons, some historical and one tax related.
Historical reasons are that the company raised a public issue at some point in time in the distant past and the exchange (BSE is a very old exchange) provided a means for liquidity. Some times the firm may have been the result of a de-merger exercise mainly meant for the promoter’s benefit. Over time promoters would have tried to shore up their holdings buy buying them back in creeping ways not attracting buy back regulations (many regulations in its current form weren’t existing earlier or were more relaxed). They may have used friends and families (who are not technically promoters but almost one, there used to be a term called “Promoter Acting in Concert” until lately) to buy and keep those shares, but may not have shored up enough to de-list.
In many cases shareholders were no longer Indian citizens (pre-post Independence / Partition era) and there has been no resolution to their shares. In some cases the shareholding may be with companies that are not not traceable / defunct. And in some cases the shareholder individuals are untraceable, have possibly died with no nominees - and the registrar would have no clue (especially in the days of physical transfer via transfer deeds)
I know of atleast one case where SEBI did not allow a small listed company to delist even though the firm made the case that the shareholders are untraceable.
Keeping a company listed, for a listing fee and compliance helps from a tax angle because it can get the capital gains tax benefit. So transfer among friends of promoters can be made tax free if it’s long term gains.
But why the promoter would like to do that? When he is having the shares listed there is always a probability that his companies valuation may get rerated based on high PE, if his company perform well means come with good set of numbers YoY.
‘But why the promoter would like to do that?’
Do what? I did not understand the question.
The promoter is keeping the stock price at the same level by not allowing the trading to happen in his stock. This way other shareholders are not able to buy/sell the stock allowing that stock price to move upward or downward.
‘The promoter is keeping the stock price at the same level by not allowing the trading to happen in his stock’
Promoter has got nothing to do with trading on the exchange. It is upto the shareholders to do so.
Let me try to re-frame my response as to why companies may not be traded or buy/sell transactions are not being seen on any given day:
i) Reason 1 : There may be some companies listed on the exchange who have paid listing fees and adhering to listing regulations & norms, but still not traded on a day to day basis : this may be because there are no buyers nor sellers as of that date - willing to sell nor willing to buy.
b) Reason 2 : Some companies listed in the stock exchange may not have paid the fee for them to get traded i.e for general public to enter into buy & sell transactions. The exchange usually puts out public notices in such situations.
More knowledgeable folks in this forum may further educate us on any other reasons apart from the above,
The link to another thread/discussion that I had provided above was purely to provide additional information in response to the query that Santosh had regarding cap on promoter holding - which imho may not be a reason for no volumes or buy/sell transactions.
Taparia Tools looks like a quality company and incredibly cheep!