Sebi to take proposal for new delisting rules to board soon

livemint.com:

MUMBAI : The Securities and Exchange Board of India (Sebi) will propose a review of its regulations for delisting stocks at its next board meeting, chairperson Madhabi Puri Buch said. “There was a popular belief that we would never review the delisting regulations and that we would stay with the reverse book-building process. A consultation paper has already been floated, and Sebi has received a lot of feedback.

At the next board meeting, we are taking that proposal to our board," Buch said while addressing Ficci’s Capital Markets Conference, or CAPAM 2023, in Mumbai on Thursday. A Sebi sub-group had considered providing some alternatives to the reverse book-building process, including an option to delist shares at a fixed price. Its consultation paper floated in August said: “The fixed price route will give acquirers and shareholders certainty concerning 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." Under existing regulations, the exit price is determined when the cumulative shareholding of the promoter, along with the shares tendered by public shareholders, reaches 90% of the total issued shares under a reverse book-building mechanism. During reverse book-building, shareholders are invited to submit offers at prices above or equal to the floor price. After the offer closing period, the buyback price is determined based on the offers collected.

This process helps ensure fair price discovery for the buyback. However, Sebi discovered that certain constituents used this opportunity to rig prices. Sebi’s primary goal is to curb possible share manipulation in a company that has chosen to delist from stock exchanges.