Sebi set to amend delisting norms soon

The board of the capital markets regulator Securities and Exchange Board of India (Sebi) will discuss amendments to the delisting norms at its upcoming board meet. The move comes after three months since the watchdog released a consultation paper to review the existing framework that allows listed companies to delist from the stock exchanges. 

“There was a popular belief that we will never review the delisting regulations and we will always stay with the reverse book building process. We have a consultation paper that was floated, we have got a lot of feedback and at the next board meeting we are taking that proposal to our board,” said Sebi chairperson Madhabi Puri Buch, while speaking on the sidelines of a capital market summit organised by industry body FICCI. 

A consultation paper for the review of the voluntary delisting regulations was released by Sebi in August. The aim was to review the pricing mechanism for delisting especially the reverse book building process while exploring other alternatives to determine exit price in case of voluntary delisting. Sebi also plans to review the compulsory delisting framework adopted by the stock exchanges. 

This assumes significance as market participants repeatedly highlighted issues with the current regulatory framework for delisting.  

The capital market regulator, in its discussion paper, has proposed reviewing various aspects of the delisting regulations, including counter-offer mechanism, floor price, alternatives to reverse book building route, and also the manner in which the reference date for floor price is determined in the existing set of regulations. 

Data from Prime Database shows that in the current calendar year, there have been a total of eight delisting offers till October. While the cumulative size of the offers was nearly Rs 1,030 crore, the acquired amount was only Rs 144.19 crore. Incidentally, there were 16 delisting offers in 2022 with the cumulative size pegged at Rs 1,890 crore though the acquired amount was merely Rs 82.21 crore. 

Meanwhile, the Sebi chairperson has also said changes in insider trading regulations are also on the agenda of the regulatory agency but those might be taken up at the board level early next year. 

Interestingly, Buch said that it is fine if a decision is delayed by a few weeks but no regulation should be designed without data and its analysis. 

She highlighted the fact that the regulator has adopted a very consultative approach when it comes to making regulations as a third of the 167 circulars it issued last year went through the public consultation route before becoming laws. 

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