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Understanding Securities Delisting Regulations

This document outlines the regulations around delisting of securities from stock exchanges in India according to SEBI regulations. It discusses the background of delisting regulations and the conditions that must be met for voluntary delisting from some or all exchanges. For voluntary delisting from all exchanges, it describes the process that must be followed including board approval, shareholder approval, appointment of a manager, public announcements, an exit opportunity for shareholders, and a reverse book building process to determine the delisting price. It also briefly discusses compulsory delisting according to the Securities Contract Regulation Act.

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62 views8 pages

Understanding Securities Delisting Regulations

This document outlines the regulations around delisting of securities from stock exchanges in India according to SEBI regulations. It discusses the background of delisting regulations and the conditions that must be met for voluntary delisting from some or all exchanges. For voluntary delisting from all exchanges, it describes the process that must be followed including board approval, shareholder approval, appointment of a manager, public announcements, an exit opportunity for shareholders, and a reverse book building process to determine the delisting price. It also briefly discusses compulsory delisting according to the Securities Contract Regulation Act.

Uploaded by

KK Singh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Delisting of Securities

Rajat Dixit
Background of Delisting Regulation

● Listing
● Delisting
● SEBI (Delisting of Security) Guidelines, 2003
● SEBI (Delisting of Equity Shares) Regulation, 2009
● SEBI (Delisting of Equity Shares) Regulation Amendment, 2014
● SEBI (Delisting of Equity Shares) Regulation, 2021
Conditions for Delisting (R. 4)

● Delisting of equity shares is not permitted-


○ unless 3 years has elapsed since listing of that class of equity shares;
○ if any instrument of same convertible equity share(s) is outstanding;
○ unless 6 months has elapsed from the date of completion of buyback (if any);
○ unless 6 months has elapsed from the date of preferential allotment (if any).
● No acquirer shall propose delisting of equity shares of a company, if the acquirer had
sold equity shares during past 6 months.
● Exception of Regulation 4- Regulation 5.
Delisting

Compulsory Voluntary

Some Stock
All Stock Exchanges
Exchanges
Voluntary Delisting (Ch. III)
Part A
● R5. Delisting from some of the recognised stock exchanges.
○ A company may delist its equity shares from one or more of the recognised stock
exchanges on which it is listed without providing an exit opportunity to the public
shareholders, if after the proposed delisting, the equity shares remain listed on
any recognised stock exchange that has nationwide trading terminals.

● R6. Procedure for delisting where no exit opportunity is required.


○ obtain prior approval from Board of Directors;
○ make an application to relevant SE for delisting its equity shares;
○ issue a public notice of proposed delisting;
○ disclose the fact of delisting in its first annual report post delisting.
○ Such application to be disposed of by SE within 30 working days from the date of
receipt of such application that is complete in all respects.
Part B
● R7. Delisting from all the recognised stock exchanges.
○ Exit Opportunity to all the public shareholders holders.
● R8. Initial public announcement.
○ Announce promptly.
○ Must Contain-
■ the reasons for delisting;
■ an undertaking with respect to compliance with sub-regulations (2) and (5)
of Regulation 4 of these regulations.
■ The initial public announcement shall not omit any relevant information or
contain any misleading information.
● R9. Appointment of the Manager to the offer.
○ Prior to announcement, the acquirer to appoint merchant banker who will act as
manager to the offer.
○ Manager to the offer shall not be an associate of the acquirer.
○ Initial public announcement and subsequent activities shall be undertaken by the
acquirer through the Manager to the offer.
Exit Opportunity

● R10. Approval by the Board of Directors.


● 11. Approval by shareholders.
● 12. In-principle approval of the stock exchange.
● 14. Escrow account.
● 15. Detailed public announcement.
● 16. Letter of offer.
● 17. Bidding mechanism
● 18. Manner of tendering shares
● 19. Right of shareholders to participate in the reverse book building process
● 20. Discovered price.
● 21. Minimum number of equity shares to be acquired.
● 23. Failure of the offer.
Compulsory Delisting (Ch. V)

● Section 32. Compulsory Delisting


○ SCRA, 1956
○ Panel and it composition
○ Schedule III
● Section 33. Rights of Public Shareholders in case of compulsory delisting
○ Exit opportunity
○ Option to retain shares
○ Interest
● Section 34. Consequences of compulsory delisting
○ Bar to access securities market for 10 years.
○ Bar in case of Positive fair value.

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