Boost for rebels over delisting

STOCK market authorities are considering abolishing the controversial rule that allows directors to delist their companies' shares without consulting investors.

Advertising group Cordiant and lighters company Ronson left the London Stock Exchange's main market last week, despite opposition from shareholders.

Slug & Lettuce pubs group SFI made a similar move in May. Internet firm I-Spire and lampshades-to-shower curtains business Aquarius are among several companies on the junior Alternative Investment Market to have delisted recently.

The situation is the same on both the main market, whose listing rules are regulated by the Financial Services Authority (FSA), and Aim, which is overseen by the London Stock Exchange. In both markets, directors have the power to delist the shares without any requirement to win shareholder approval.

Directors may delist for many reasons. Ronson's board claimed the cost of maintaining a listing was too high, while Cordiant's board said the move would protect a £75m payment due from French rival Publicis.

But the action has been attacked by shareholders who are then left without a liquid market in which to buy and sell shares. They can only sell their shares by finding another person who is willing to buy them.

Nicos Malamatinas, a small shareholder in Ronson, set up a pressure group to try to fight the delisting. 'I could not believe that directors could make such a decision without asking the permission of the shareholders who own the company,' he said.

The concern of small investors has now been recognised by the exchange and the FSA. Simon Brickles, head of Aim, said: 'There has been concern in the market about the ability of companies to delist without consulting the shareholders. We have undertaken a consultation process to evaluate the situation.'

That process is expected to be opened to public discussion in the next few weeks and it is thought Aim will propose that to delist a company, directors will need the approval of 75% of shareholders voting at a meeting.

The FSA is also looking at the situation on the main market as part of its wide-ranging review of the listing rules announced in January.