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The time required for a promoter or acquirer to delist a company from stock exchanges could more than halve from 137 days to 64 if the regulator implements a planned review of the current delisting regulations.
The Securities and Exchange Board of India’s (Sebi’s) discussion paper on this suggests steps including doing away with the requirement for shareholder and stock exchange approval.
“...if there is no requirement of prior approval of shareholders by a special resolution and in-principle approval from the stock exchange, it would considerably reduce the time to complete the delisting process,” said the Sebi discussion paper, put out on its website on Friday.
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Sebi has suggested trading activity be restricted in the two days before the offer to ensure all shares are available for tendering in the delisting process. It has also been suggested that holders of depository receipts can tender their shares if the beneficiaries of the receipts are known. It has also suggested allowing tendering of shares through the exchange platform for delisting to help investors avoid tax implications of off-market transactions.
Current rules require the acquirer to either reach higher of 90 per cent of the total issued share capital or acquire at least 50 per cent of the offer size. The regulator has suggested removing the latter requirement. It has suggested a tweak in the determination of the exit price as well.
“...the exit price determination may not be based on the price at which the maximum number of shares are tendered but on the price at which shareholders representing a requisite number of shares tendered are willing to exit i.e. the highest price at which the promoter touches the threshold limit,” it said. “The delisting offer may be considered successful only if the acquirer acquires shares from at least a specified number of shareholders which could be, say, 50 per cent of the number of public shareholders,” it added. Alternatively, it has been suggested that the delisting offer may be considered successful only if the acquirer acquires at least a specified number of shares, say 50 per cent, 'held and not traded' for more than a year as on the date of announcement of the delisting offer.
The regulator has suggested the offer price could be determined on a ‘fixed-price’ basis or a two-step process through which the promoter could make a counter offer.
“…the first step remains the same as in the case of current RBB (reverse book building) process i.e. shares can be tendered in the RBB process and the price is discovered. In case this discovered price is at a significant premium to the floor price or the price is not acceptable to the promoter, the acquirer may be given an option to make a counter offer to public shareholders instead of rejecting the discovered price and the offer failing,” it said.
Shareholders can either accept or reject this second offer. The discussion paper has invited public comments till May 30.
