Wednesday, March 5, 2008

Stock Delisting Procedure.

The Offer Price or rather offer prices comes much later. Say through Stage 3, Stage 4 etc.

First Stage is Floor Price, which almost always is the lowest of the levels in consideration. That's why the term 'floor' and not 'ceiling' or something in between. The floor price is practically always below the market price. Thanks to SEBI's loose guidelines. But the stocks actually gets sold at a price much above the Floor Price, say by +20% to 100%.

This is stage 2, and call it 'Exit Price'. By this time the 'ceiling' is reached. The roof is yet to be reached though. Which is when the delisting company comes with 'Offer Price' for those who did not 'exited' even at the exit price, and it is not uncommon to see such offer price is revised upwards to corner the last 9%-1% of the shares.

While the system of Floor Price and Exit Price is the mandatory part of the process, the Offer Prices beyond the Exit Price is discretionary on the delisting company.