At next board meeting, Sebi to relax delisting norms: Madhabi Puri Buch

The Securities and Exchange Board of India (Sebi) will ease the delisting regulations at its upcoming board meeting, chairperson Madhabi Puri Buch said on Thursday.

The move is expected to help promoters take their company private if they wish to do so.

The current framework used for delisting – the reverse book building (RBB) process — is seen as skewed in favour of the minority shareholders and has thwarted several attempts by India Inc to take their company off bourses.

Some of the recent examples of failed delisting bids include Shreyas Shipping in October and the high-profile one by Anil Agarwal-led Vendata three years ago.

“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 is already 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 delivering her address at the capital market conference organised by industry body Ficci.

Sources said Sebi’s next board meeting could take place by the end of this month or early next month.

In a discussion paper floated in August, the market regulator proposed alternatives to the RBB framework, which included a fixed-price mechanism and a lowering of the threshold for the counter-offer mechanism.

Sebi also proposed a delisting framework for investment holding companies, as the current mechanism does not address it separately.

Under the current RBB mechanism, promoters must acquire at least 90 per cent of the total shareholding for the delisting bid to succeed.

The route is misused by operators, who try to corner shares ahead of the delisting bid to extract unrealistic prices from the promoters.

Buch added that Sebi would take up the overhaul of the ‘trading plan’ framework during subsequent board meetings. The move will provide more clarity to promoters and other insiders to deal in their own shares.

“For perpetual insiders, such as promoters, there is no window for them to buy and sell shares. There are no takers for the current regulations around trading plans. This means that its configuration is wrong. We will take this up after one or two board meetings,” the Sebi chief said.

Buch said there are multiple rounds of backtesting happening on the proposal to introduce a new total expense ratio (TER) framework for the mutual fund industry.

Buch underscored that Sebi is not on a hyperdrive to tighten the regulatory framework.

On the contrary, she said nearly half of the circulars issued by the regulator over the past year have been aimed at ‘ease of doing’ business. Further, she said a third of them have been issued after undergoing a consultative approach.

Between 2003 and 2013, only seven per cent of the total circulars issued by Sebi had followed a consultative process, this has increased to 33 per cent in the past year.

“Our market has grown tremendously and has become very complex. It would be wrong if we don’t consult fully and understand everybody’s perspective before we make something into law,” she added.