All companies with less than 10,000 shareholders will be able to move in their stock from the Belgrade Stock Exchange under the conditions defined by the Capital Market Law, which came into force in late 2011.
In order for a company to use this possibility, it is necessary for the volume of its shares traded on the stock exchange over the period of six months to amount to less than 0.5% of the total outstanding stock, that is, the amount of shares traded on the exchange during any three out of six months must be below 0.05% of the total outstanding stock per month.
Therefore, we are talking about liquidity. If a company is liquid, that is, if its shares are traded on the exchange, it cannot delist its stock from the organized market even if it has less than 10,000 shareholders.
However, financial experts agree that the situation on the Belgrade Stock Exchange will not change significantly in spite of possible increased delisting caused by novelties in the Capital Market Law, which allows companies with less than 10,000 shareholders to withdraw their listing from the stock exchange.
– In any case, turnover on the Belgrade Stock Exchange should not suffer some major changes because only the stocks whose turnovers have already been low are going to be delisted – Milivoje Knezevic, manager of the Analysis Division at the broker company MV Investments, says to eKapija.
Vladan Rankov, project manager at Wise Broker, is of similar opinion:
– The Law allows delisting, but that does not mean that shareholders will really decide to do something like that. I also believe that the management of companies will find it important to stay in the capital market. I think that those who should stay in the stock market and who want to trade their shares will do that. I do not expect some revolutionary changes, but it would be good if the companies having no motive to stay on the stock exchange decided to delist their stock. It is unbelievable that we are among the leading countries in the world in the number of companies listed on the stock exchange.
New classification of companies
A decision to delist the stock of a company from the exchange is made by the company’s Shareholders’ Assembly. According to earlier regulations, all open joint-stock companies, that is, all companies with more than hundred shareholders, were obliged to list their shares on the stock exchange. New provisions of the Corporate Law, which are expected to come into force on 1 February 2012, will abolish the division into open and closed joint-stock companies, and there will only be public companies.
Nenad Gujanicic, head broker at Sinteza Invest Group, believes that the new Capital Market Law will contribute to greater protection of minor shareholders.
– When it comes to “cleaning” the stock exchange mechanism, which is burdened with over 1,000 stocks of securities that have not been traded to a satisfying extent for a long time now, the new Law also envisions several levels of the market and delisting of stocks that are quite illiquid. Therefore, the Law protects minor shareholders who may disagree on that issue, so that the company will have to buy out all shares from all interested shareholders.
On the other hand, Gujanicic also says that the new Law defines much more criteria for determining the price to be paid to minor shareholders (one of them is accounting value), which will significantly raise the costs of the entire process for majority shareholders, and it may easily happen that the whole idea about delisting of a large number of stocks be abandoned.
Officials of the Belgrade Stock Exchange are not ready to speak about the first effects of the new Capital Market Law because they still await its full application. Although there are no official data, it is estimated that the number of listed companies now drops by 3 to 5 per week. At one moment, there were as many as about 1,700 companies listed on the Belgrade Stock Exchange.
