The funds meant for delisting offers can be kept in an interest-bearing escrow account but bankers will have to ensure that money is readily available for shareholders, capital market regulator Sebi has said.
"The cash component (delsiting offer funds) of the escrow account may be maintained in an interest bearing account," the Securities and Exchange Board of India (Sebi) said in a notice.
"However, the merchant banker shall ensure that the funds are available at the time of making payment to shareholders," it added.
Delisting of securities in market parlance means removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that firm cannot be traded at that stock exchange.
The watchdog, in March, notified new regulations to reduce the time taken for completing the process and provides for relaxation on case-to-case basis.
The changes were are aimed at making the existing regulatory framework on delisting more effective.
Under the new norms, timeline for completing the delisting process has been reduced to 76 working days from 137 calendar days (about 117 working days). At times, the process takes more than a year.
Among others, exchanges would be given five working days to give their in-principle approval for delisting.
Delisting would be considered successful only if at least 25 per cent of public shareholders participate in the reverse book building process. Besides, holding of the acquirer, together with the shares tendered by public stakeholders, should reach 90 per cent of the firm's total share capital.
