Delisting may also not be allowed within three years of listing. The Securities and Exchange Board of India (Sebi) proposed to prohibit companies that have concluded a buyback of securities or made a preferential allotment from delisting their shares.
Further, no company can delist its shares within three years of listing its shares on any stock exchange, or when it has any convertible instruments still outstanding, the Sebi's proposed amendments to the February 2003 delisting guidelines say.
Sebi's proposed amendments say that when the promoters do not accept the "discovered price" in the reverse book building route for delisting, it will be presumed that they have aborted the delisting process.
As a consequence, if the public shareholding has fallen below 10 per cent at the start of the bidding, the public holding will have to be brought up to 10 per cent by issuing new shares, or by an offer for sale.
Sebi has clarified that in the case of voluntary delisting, the shares may be delisted from all the stock exchanges where they are listed or only from the stock exchange where they are listed, provided everyone is given an exit opportunity.
Where the shares are still traded on any exchange, the company does not need to provide a separate exit opportunity.
For delisting, the company will have to obtain the approval of its shareholders by introducing a special resolution and within one year of passing the resolution make an application to the stock exchanges. The company has to close the process of delisting within 45 days of receiving approval from the exchanges.
Sebi has reiterated that the company's promoters will have to deposit in an escrow account 100 per cent of the estimated amount of consideration calculated on the basis of the floor price indicated and the number of securities required to be acquired.
Sebi has already indicated that delisting will be through the reverse book building method. Where the shares are frequently traded, the floor price for building purposes will be at the average of the weekly high and low of the closing prices for the preceding 26 weeks.
Where the securities are infrequently traded, Sebi has set out three alternatives for arriving at the floor price. The offer will have to remain open for a period of 15 days, Sebi has said.
