The Securities and Exchange Board of India (SEBI) has greenlit significant changes to the voluntary delisting of shares, introducing a fixed price process as an alternative to the current reverse book building model.
Under the new framework, the fixed price offered by an acquirer must include at least a 15% premium over the floor price, as set by delisting regulations. "Why should we say that once you are listed you can never leave... this isn't Hotel California. This is a rich, vibrant market, we welcome people but if for some reason they need to exit, they must be able to," said SEBI chief Madhabi Puri Buch during a press conference on Thursday.
In the existing reverse book building model, shareholders propose a price at which they are willing to sell their shares to promoters or major shareholders. The buyback price is then determined through this price discovery process after the offer closes.
These changes aim to curb the manipulation of shares of companies opting for delisting from the stock exchanges. SEBI has also adjusted the counter-offer mechanism for delisting through the reverse book building process.
The threshold for making a counter-offer has been reduced from 90% to 75%, provided that at least 50% of the public shareholding has been tendered. The counter price must be no less than the higher of the volume-weighted average price of the shares tendered under the RBB process and the indicative price, if offered by the acquirer.
Additionally, SEBI introduced an alternative delisting framework for listed investment holding companies through selective capital reduction. Listed holding companies with at least 75% of their fair value comprising direct investments in other listed firms can now transfer shares proportionately to public shareholders.
They are also permitted to make proportionate cash payments to public shareholders against other assets, including investments in land, buildings, and unlisted companies.