The delisting will not affect the company’s operations or its ability to raise capital, as Tata Motors will continue to be listed on the Bombay Stock Exchange and the National Stock Exchange of India. The company’s shares will also continue to be traded on the over-the-counter market in the United States.
This move is not uncommon for companies with low trading volume in the US market. Many companies choose to delist from US exchanges to focus on their domestic market and reduce regulatory and compliance costs.
Tata Motors’ ADS have been traded on the NYSE since 2004, and the company has been listed on the Bombay Stock Exchange since 1988. The company is known for its wide range of vehicles, including cars, trucks, buses, and military vehicles. The company also has a strong presence in the global market with operations in several countries including India, the UK, South Africa and Thailand.
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Delisting of Tata Motors’ ADS from the NYSE effective Monday
The delisting of Tata Motors’ ADS from the NYSE is effective Monday, January 23rd, 2023. Shareholders who still hold the ADS after the delisting will be able to sell them on the over-the-counter market in the United States or convert them into the company’s shares traded on Indian exchanges.
Several notable industries have decided to delist their American Depositary Shares (ADS) from the New York Stock Exchange (NYSE) in recent years due to a variety of reasons, including low trading volume and high compliance costs.
One such industry is the automobile sector, with companies such as Tata Motors and SAIC Motor Corporation Limited, one of China’s largest automobile manufacturers, delisting their ADS from the NYSE. Both companies cited low trading volume and high compliance costs as reasons for their delisting.
Another industry that has seen a number of delistings is the technology sector. Chinese tech giant, JD.com, announced in 2019 that it would delist from the NYSE and instead list on the Hong Kong Stock Exchange. The company cited the high cost of compliance with U.S. securities regulations as the main reason for the delisting. Similarly, the Chinese tech company, Sina Corporation, was delisted from the NYSE in 2013, citing similar reasons.
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The retail industry has also seen a number of delistings from the NYSE. In 2018, Chinese e-commerce company, Alibaba Group Holding Limited, delisted from the NYSE, citing the high cost of compliance with U.S. securities regulations as the main reason.
It is worth noting that delisting from the NYSE does not necessarily mean the end of a company’s ability to raise capital or its operations, as companies can still be listed on other exchanges and traded on over-the-counter markets.
However, it is a clear indication of the companies preferring to focus on their domestic market and reducing regulatory and compliance costs. The trend of delisting from US exchanges is expected to continue as these companies grow and their domestic market becomes more robust.
Over the past few years, there has been a consistent decrease in the number of depositary shares that are currently outstanding, despite the fact that the company has seen an increase in both its liquidity and the participation of international investors in India.
According to Tata Motors, this means that there is substantially less of a justification for the ADS listing in the United States.
On the National Stock Exchange, shares of Tata Motors finished the day higher by 1.3%, at a price of 408.40 rupees each. On Friday, the price of the ADRs on the NYSE was $24.88, up 2.3% from the previous day.
According to Tata Motors, the delisting will assist in simplifying the company’s financial reporting requirements and reducing the costs associated with administrative operations.
The company has not taken the necessary steps to have the securities listed or registered on any other US securities exchange.
By the 24th of July in 2023, holders of ADS will have the opportunity to swap the units that they possess with the depositary for the underlying ordinary shares of the company.
There would be no repercussions for the trading of the company’s shares on the Indian stock exchanges as a result of the delisting of ADS. There will not be any offer made by Tata Motors to purchase either the underlying ordinary shares or the ADSs. The company anticipates that it will be deregistered from the US Securities Exchange and will no longer be required to submit reports in accordance with the Exchange Act.
The future of companies that have delisted from the New York Stock Exchange (NYSE) is a topic of debate among industry experts. While some believe that delisting from the NYSE can be a sign of financial trouble, others argue that it can be a strategic move for companies to focus on their domestic market and reduce regulatory and compliance costs.
Experts predict that more companies will choose to delist from the NYSE as the cost of compliance with U.S. securities regulations continues to rise. Companies that have a strong focus on their domestic market and are looking to reduce regulatory and compliance costs may see delisting as a viable option.
Overall, the future of companies delisted from the NYSE is uncertain, and it will depend on the specific circumstances of each company. Investors should keep an eye on the developments of these companies and consult with a financial advisor before making any decisions.