Central

Section 22 of The Securities Contracts (Regulation) Act, 1956

2[22. Right of appeal against refusal by stock exchanges to list securities of public companies.--Where a recognised stock exchange acting in pursuance of any power given to it by its bye-laws, refuses to list the securities of any public company 3[or collective investment scheme], the company 1[or scheme] shall be entitled to be furnished with the reasons for such refusal, and may,--

(a)within fifteen days from the date on which the reasons for such refusal are furnished to it, or
(b)where the stock exchange has omitted or failed to dispose of, within the time specified in sub-section (1) of section 73 of the Companies Act,1956 (1 of 1956) (hereafter in this section referred to as the "specified time"), the application for permission for the shares or debentures to be dealt with on the stock exchange, within fifteen days from the date of expiry of specified time or within such further period, not exceeding one month, as the Central Government may, on sufficient cause being shown, allow, appeal to the Central Government against such refusal, omission of failure, as the case may be, and thereupon the Central Government may, after giving the stock exchange an opportunity of being heard,--
1. (i)vary or set aside the decision of the stock exchange, or
2. (ii)where the stock exchange has omitted or failed to dispose of the application within the specified time, grant or refuse the permission, and where the Central Government sets aside the decision of the recognised stock exchange or grants the permission, the stock exchange shall act in conformity with the orders of the Central Government:] 4 [Provided that no appeal shall be preferred against refusal, omission or failure, as the case may be, under this section on and after the commencement of the Securities Laws (Second Amendment) Act, 1999 (32 of 1999).]

Summary

If a stock exchange refuses to list a public company's shares, it must provide the specific reasons for that refusal.
This right to receive reasons also applies to collective investment schemes that are denied listing.
An appeal can be made to the Central Government if the exchange refuses to list or fails to make a decision in time.
The appeal must be filed within fifteen days of getting the refusal reasons or fifteen days after the legal time for the decision ends.
The Central Government can choose to change the exchange's decision, set it aside, or grant the listing permission itself.
Since late 1999, new appeals can no longer be started under this specific section of the law.

Practical examples

1In January 1996, a public company named Heritage Textiles applied for listing. When the stock exchange refused, the company used Section 22 to appeal to the Central Government on February 10, 1996, asking them to overrule the exchange's decision.

2A collective investment scheme was denied listing in 1998. The scheme managers waited for the reasons and then filed an appeal under Section 22 on August 15, 1998, because the stock exchange had failed to dispose of their application within the specified time limit.

FAQ

1. Who had the power to hear appeals under Section 22 of The Securities Contracts (Regulation) Act, 1956?

Under Section 22 of The Securities Contracts (Regulation) Act, 1956, the Central Government was the authority that heard appeals against a stock exchange's refusal to list securities.

2. Can a collective investment scheme use Section 22 of the Securities Contracts Act to appeal a listing refusal?

Yes, Section 22 of The Securities Contracts (Regulation) Act, 1956 specifically includes collective investment schemes along with public companies.

3. Is Section 22 of The Securities Contracts (Regulation) Act, 1956 still used for new appeals today?

No, a proviso added to Section 22 of The Securities Contracts (Regulation) Act, 1956 states that no appeal can be filed under this section on or after the commencement of the 1999 Amendment Act.

4. What can the Central Government do if it agrees with an appeal under Section 22 of the Securities Contracts Act?

The Central Government can set aside the refusal or grant the permission for listing, and the stock exchange must then follow those orders according to Section 22 of The Securities Contracts (Regulation) Act, 1956.

Test yourself

Q1.Under Section 22 of The Securities Contracts (Regulation) Act, 1956, what is the initial time limit to appeal after receiving the reasons for a refusal to list?

Q2.Which authority's decision could be appealed under Section 22 of The Securities Contracts (Regulation) Act, 1956?

Q3.Based on the proviso in Section 22 of The Securities Contracts (Regulation) Act, 1956, when did this section stop accepting new appeals?

Q4.What happens if a stock exchange fails to decide on a listing application within the "specified time" under Section 22 of The Securities Contracts (Regulation) Act, 1956?

21APreviousSection 21A Delisting of securities.22ANextSection 22A Right of appeal to Securities Appellate Tribunal against refusal of stock exchange to list securities of public companies.

←Section 21A Section 22A→