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Capital market regulator Sebi today partially lifted the restrictions it had imposed on REIL Electricals India for non-compliance with the minimum public shareholding norms as the company is in the process of delisting from the stock exchanges.
In a June 4 order last year, Securities and Exchange Board of India had barred the promoters and directors of over 100 firms including REIL Electricals from dealing in securities of their firm for not meeting the requirement of 25 per cent minimum public shareholding.
Noting that REIL Electricals shareholders have approved the proposal for delisting the company, Sebi in its latest order today said that "the company/promoters could be afforded time to complete their delisting process and also suitably relax the directions issued against the company and its promoter/s who have made the delisting offer".
Accordingly, the market watchdog said, the direction issued in the interim order dated June 4, 2013 "stands modified to the extent that it shall not hinder the voluntary delisting process initiated by the company and that its promoters shall be permitted to buy shares of the company held by public shareholders in their offer for delisting".
REIL Electricals has been asked to complete the delisting process within six months, and to report the outcome of the delisting process to Sebi one month thereafter, failing which the restrictions would be re-imposed immediately.
However, Sebi said that directions regarding freezing of voting rights and corporate benefits of the promoters and directors as well as restraint on them from holding any new positions in any listed firm "shall continue to be in effect till such time the company is delisted from stock exchanges or till the time the company becomes compliant with the minimum public shareholding norms, whichever is earlier".
Shareholding of the promoter group of REIL Electricals stands at about 98.19 per cent, while the public holds 1.81 per cent in the company.
Sebi noted that the special resolution for delisting was passed by REIL Electricals on July 20, 2013 and as such the final application should be filed within one year of passing of the special resolution, as per the norms.
"In case, the company is not able to file the final application before the due date, it may have to again take approval from shareholders through a special resolution," Sebi said in the order.
"I also note that the company is still awaiting the in-principle approval from BSE," it added.
