SEBI has amended the SEBI (Delisting of Equity Shares) Regulations, 2009. Under Delisting Regulations, a delisting offer is considered successful if post-offer shareholding of the promoters is higher of (a) 90% of total shares, or (b) aggregate percentage of promoter’s pre-offer shareholding and 50% of the offer  size. The amendment specifies that an  offer for delisting would be considered successful if post offer shareholding of promoter, along with persons acting in concert, is 90% of total issued shares, excluding shares held by custodian towards issue of depository receipts, and, at least 25% of the public shareholders (holding shares in demat account) on the date on which the Board of  Directors of the company approves the delisting, should have participated in the Reverse Book Building process. However, this condition shall not apply if it is shown to the stock exchanges that the promoters/ acquirers have delivered the letter of offer to all public shareholders through registered/speed post/courier/hand delivery with a proof of delivery or through email with a read receipt.

Under the prior Delisting Regulations, the final price at which the promoter was required to facilitate other shareholders to exit was the price at which the maximum shares were tendered under the Reverse Book Building process. This has been amended to provide that the final price shall be the price up to which the aggregate number of shares offered, if accepted, will enable thepromoter along with persons acting in concert to reach the threshold of 90%.

Prior to approval of the delisting proposal, the Board of Directors of the company must make disclosure to the recognized stock exchanges that the promoters or acquirers have proposed to delist the company and must also appoint a merchant banker to conduct a due diligence of trading in shares or off market transaction, during the preceding 2 years, by top 25 shareholders as on the date of meeting convened to approve the delisting proposal.


VA View

These changes have been brought to make voluntary delisting easier for the companies. These  amendments will reduce the time taken for completing the process and provides for relaxation on case-to-case basis. Timeline for completing the delisting process has been reduced to 76 working days from 137 calendar days (about 117 working days). These changes providing for speedy exit option, will give rise to an increase in applications for delisting giving much needed respite to foreign companies to get their local arms delisted.