Sebi to soon announce easier, faster delisting norms

To make delisting easier and faster, market regulator Securities and Exchange Board of India (Sebi) will soon announce a new set of regulations wherein time required to complete such an exercise may be more than halved from a minimum of 137 days at present.

The changes are being made after taking into account suggestions made by the industry and other stakeholders, including market entities and investors.

The new norms - to help companies save cost and time with a faster process and also check any manipulation in share price associated with a longer time-frame- will be put up for approval at Sebi's next board meeting.

According to sources, the board of Sebi is likely to meet next week.

It will also discuss new insider trading norms and listing regulations.

As per the proposed delisting norms, the whole exercise could be completed in more than half of 137 days presently required for completion of the process. At times, the process takes more than a year.

Besides, a company has to make a public announcement regarding the delisting process soon after the board meeting and letter of offer has to be dispatched within a week. The delisting offer would be for a period of 4-5 days.

Under the new regulatory regime, a company has to make payment or return the shares within a month as against the current practice which takes about three months.

The new rules on the matter come against the backdrop of concerns raised by various entities about existing delisting process which at times is also seen as time-consuming.

The delisting offer will be considered successful if the holding of the promoter (or acquirer) reaches 90 per cent post offer.

Current rules require the acquirer to either reach higher of 90 per cent of the total issued share capital or acquire at least 50 per cent of the offer size.

Sebi may also do away with the requirement for shareholder's nod and bourses' approval for the delisting process.

The offer price could be determined on a 'fixed-price' basis or a two-step process through which the promoter could make a counter offer.

The current delisting regulations were put in place in 2009 and facilitates removal of the securities of a listed company from a stock exchange with promoters buying out shares held by minority shareholders.

The changes in Sebi's delisting norms are being considered to harmonise them with other regulations, including the new Companies Act and other regulations of Sebi itself such as takeover and buyback norms.