Securities and Exchange Board of India (“SEBI”) issued interpretative letter (dated November 3, 2016) under the SEBI (Informal Guidance) Scheme, 2003 (“the IG Scheme”) in the matter of Fiber Plus Industries Limited (“Fiber Plus”). It relates to voluntary delisting.
For more than fifteen years, the equity shares of Fiber Plus were listed on the Delhi Stock Exchange. The Delhi Stock Exchange Limited was derecognized vide SEBI order dated November 19, 2014. After the Delhi Stock Exchange got derecognized, the equity shares of Fiber Plus were listed on the Metropolitan Stock Exchange of India Limited from February 13, 2015. The equity shares of Fiber Plus were not listed on any other stock exchange. Promoters wanted to delist Fiber Plus by providing public shareholders with exit opportunity as per the provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009 (“the Delisting Regulations”).
Regulation 4 of the Delisting Regulations provides for certain circumstances and conditions in which delisting is not permissible. Regulation 4 (1) (c) of the Delisting Regulations is important for the purposes of this informal guidance, as below.
“4. (1) No company shall apply for and no recognised stock exchange shall permit delisting of equity shares of a company, -
(c) unless a period of three years has elapsed since the listing of that class of equity shares on any recognised stock exchange; or XXXX”
The issue on which interpretative letter was sought from SEBI by Fiber Plus was that whether Fiber Plus was eligible for voluntary delisting under Regulation 4 (1) (c) of the Delisting Regulations.
SEBI took the view that, “the condition at Regulation 4 (1) (c) above implies that the equity shares proposed to be delisted should have had the ‘listed’ status on ‘any recognised stock exchange’ for a period of 3 years prior to the application for delisting. XXXX, the equity shares of Fiber Plus Industries Limited appear to qualify within the said provision for the purpose of voluntary delisting.”