Regulator proposes to ease delisting norms

livemint.com:

NEW DELHI : The Securities and Exchange Board of India (Sebi) has proposed to ease the delisting regulations for companies to facilitate smoother exits for listed firms from stock exchanges. In a consultation paper floated on Monday, the regulator proposed providing an alternative route to listed firms for reverse book building and has also proposed a tweak counter offer framework. In a press conference held last month, Sebi chairperson Madhabi Puri Buch said a relook into the delisting rules was necessary since any participant who enters the listed markets should be able to exit it.

In the 20-page consultation paper, Sebi proposed to allow firms to make delisting offers at fixed prices. Through this mechanism, the company can announce a fixed price for delisting, and investors can choose to sell or not sell their shares at the price. If the acquirer’s offer fails to take him to 90% shareholding in the company, the acquirer will be required to wait for six months and then refloat the offer.

This proposal significantly eases the process of delisting for listed firms since reverse book building has been a key thorn for delisting in India. “It was also discussed that the fixed price route will give acquirers and the shareholders certainty with respect to the pricing of the delisting offer. This would help shareholders decide upfront whether to participate in the delisting process or not at the given price," Sebi said in the discussion paper.