Sebi may soon re-look new delisting norms

As industry opposition mounts against new delisting norms wherein promoters planning to take their
company private have to secure the consent of 25 percent of public shareholders, capital market regulator Sebi today indicated that it is ready to have a re-look at them.

The Sebi norms issued last month, which mandate participation of at least 25 percent public shareholders in the delisting process, has also drawn criticism from market participants.

“There is one particular aspect of the new delisting… We will have a relook at it, but first we will wait for some time to see how it pans out,” Sebi chairman Upendra Kumar Sinha told investment bankers.

The Sebi board had on November 19 approved revamped norms that aim to reduce the time taken by the delisting process by about half, from minimum 137 days at present, to make the regulatory framework more effective.

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“Timelines for completing the delisting process has been reduced from 137 calendar days (around 117 working days) to 76 working days,” the regulator had said.

Apart from reducing the timeline, the watchdog has decided to retain the reverse book-building process for discovering the price of shares for the purpose of delisting.

But at the same time, it also mandated that for the delisting to be successful, at least 25 percent of retail shareholders should tender their shares. Besides, Sebi said the shareholding of the acquirer, together with the shares tendered by public shareholders, should reach 90 percent of the company’s total share capital.

To ensure that a delisting plan has been decided in a fair manner, the board should approve it only after the due diligence process, for which it can appoint a merchant banker on behalf of the company and the promoter.

Further, the company board should certify that the firm is in compliance with applicable securities law and that it would be in the interest of shareholders.

Sebi said an acquirer would have the option to delist the shares directly through delisting regulations pursuant to triggering takeover norms.

“However, if the delisting attempt fails, the acquirer would be required to complete the mandatory open offer process under the Takeover Regulations and pay interest at the rate of 10 percent per annum for the delayed open offer.
PTI