Invaluable Stock Holding Rights (Part 1)
A stock exchange administration may suspend or disallow stock trading if a company has been negligent in meeting stock market norms, but why would executives withdraw stocks voluntarily? Delisting is a growing phenomenon as far as affiliates of international companies in third world markets is concerned, and the matter deserves a close look by everyone with long term interests in stock investment and financial planning.
Regulators in countries such as India have examined the practice of delisting at considerable length, but seem to have missed the bus! Most discussions on delisting revolve around the stock price. It is commendable to worry about just compensation for small holders of stocks, but it is vastly erroneous to assume that this is the only parameter worthy of lofty consideration! Stock investment is related to but distinct from stock trading. The mentality of a day trader in stocks is entirely different from a person who uses stock investment as a primary plank of retirement financial planning. There are a host of security and emotional issues that individual investors may attach to specific stocks, and snatching them away is simply unfair.
Allowing majority stock owners to engage in delisting stocks does not serve the greater public interest either. The stock market format brings democracy in to business, and it is an invaluable structure of modern society. Governance and national legislation such as Sarbanes-Oxley have global ramifications. Regulators may continue to look at the books of companies that are not listed on any stock market, but the tax paying public is denied these privileges. Read the annual 10-k submission of any company listed in a US stock exchange, and you will probably wonder at how these guys get past the fed!
Minority interests are vital in any democratic set-up. The rigor, with which majorities pay heed to the opinions and needs of dissenting minorities, is the most reliable plank for stability in any free enterprise. That is why companies listed on any progressive stock exchange have specific teams responsible exclusively for investor relations. Each owner of even just one unit of stock is respected as a valued and trusted part of the organization. That is why stock investment is not just a profitable vocation, but a learning experience as well. Owners of stocks which have grown from humble beginnings to giant world-beaters derive more value from pride of stock ownership than from dividends alone.
Invaluable Stock Holding Rights (Part 2)