Delisting rules: Only check and no balance
Delisting requires the following voting patterns:
First, votes cast in favour of the proposal by just public shareholders (non-controlling shareholders) of the listed company should be at least two times the number of votes cast against it. This is akin to the super-majority of minority shareholders.
Second, the number of votes cast by the shareholders (including the controlling shareholders) of the listed company should be at least three-fourths in favour of the proposal.
And finally, the number of voters in favour of a proposal should be higher than the number of voters against it.
While the above requirements make the decision-making very inclusive, they are also prone to abuse by a handful of interested parties.
To get a super-majority of a minority, it becomes very difficult for a corporate to obtain twice the number of positive votes for every negative vote. It means that less than just a 1/3rd of minority shareholders in value can block a proposal because getting a positive vote from all the remaining 2/3rd could be a challenge since everyone doesn’t vote. By way of an illustration, let us consider a company having 70% of its shareholders as controlling shareholders, and the balance 30% as public.
Some part of the public category will be held by retail which generally doesn’t vote. In such a case, a small group of 5-7% of the overall shareholders (or lesser) with negative votes can potentially block the transaction since it would be virtually impossible to get every remaining non-controlling voter to
