Companies may be allowed to delist via fixed price: Sebi Chief

economictimes.indiatimes.com:

Sebi) is exploring the option of allowing companies to delist by announcing a fixed price for shares to be bought back in place of the existing reverse book building process, chairperson Madhabi Puri Buch said on Monday. The regulator is also working on instantaneous settlement of stock market transactions and reviewing the trading plan mechanism for insiders at listed firms. Sebi will issue a discussion paper on the delisting process before December.

«Because of the way… it was formulated, and because of the 90% threshold, there is a possibility of misuse,» the Sebi chief told reporters on Monday. «Certain operators are specialists in delisting of shares, we know that. Their business model is, wherever there is an anticipation of delisting, go and garner 10% or more amongst their own like-minded people.

And… when the delisting proposal comes, to extract a higher price. That need not always be the fair price.»'Positive Development' Sebi is not the arbiter of what the fair price should be, she said. «But if there is a certain price that has been in the market for a reasonable period of time (and) only because of delisting, the price is jacked up to a very high level, that may not be the fair price,» Buch said.

«When we talk up about fairness, it should be fair for all the parties. Secondly, the power still rests with the investor. However, as a regulator, we cannot stand by if that power is misused and that is the protection we owe to the companies.» The delisting regulation will be reviewed by a committee headed by Keki Mistry.