Making delisting of companies less cumbersome, capital market regulator Sebi today approved revamped norms that reduce the time taken for completing the process by about half from minimum 137 days at present.
The changes, aimed at making the existing regulatory framework on delisting more effective, have been cleared by the board of Securities and Exchange Board of India (Sebi) during their meeting here.
"Timelines for completing the delisting process has been reduced from 137 calendar days (approximately 117 working days) to 76 working days," the regulator said in a release.
Apart from reducing the timeline, the watchdog has decided to retain the reverse book building process for discovering the price of shares for the purpose of delisting.
Delisting would be considered successful only if at least 25 per cent of the public shareholders participated in the reverse book building process.
Besides, shareholding of the acquirer, together with the shares tendered by public shareholders, should reach 90 per cent of the company's total share capital.
To ensure that a delisting plan has been decided in a fair manner, the board should approve the same only after due diligence process, for which it can appoint a merchant banker on behalf of the company and the promoter.
Further, the board should certify that the company is in compliance with applicable securities law and that it would be in the interest of shareholders.
Sebi said that an acquirer would have the option to delist the shares of the company directly through delisting regulations pursuant to triggering takeover norms.
"However, if the delisting attempt fails, the acquirer would be required to complete the mandatory open offer process under the Takeover Regulations and pay interest at the rate of 10 per cent per annum for the delayed open offer," the release said.
Companies having paid up capital of not more than Rs 10 crore and networth that does not exceed Rs 25 crore as on the last day of the previous financial year would be exempted from following the Reverse Book Building process.
"The exemption would be available only if there was no trading in the shares of the company in the last one year from the date of the board resolution authorising the company to go for delisting, and trading of shares of the company has not been suspended for any non-compliance during the same period," the release said.
According to Sebi, the stock exchange platform should be sued for offers made under Delisting, Buy Back and Takeover Regulations.
Depending on reasons put in writing, Sebi would consider relaxing the strict enforcement of delisting regulations.
Sebi came up with a discussion paper on delisting process in May and comments were received on aspects such as price discovery and shortening of the process.
