Delisting of Securities from Stock Exchange
On June 10, 2009, SEBI notified the SEBI (Delisting of Equity Shares) Regulations, 2009.
The delisting regulations are applicable to :
1. voluntary delisting of securities by promoters of a company
2. any acquisition of shares of a company either by a promoter or by any other person or a scheme or arrangement, consequent to which the public shareholding in such company falls below the minimum limits specified in the listing conditions or listing agreement that may result in delisting of securities.
3. promoters of companies who voluntarily seek to delist their securities
4. cases where a person in control of the management is seeking to consolidate his holdings in a company in a manner that would result in the public shareholding in the company falling below limit specified in the listing conditions or in the listing agreement
5. Companies which may be compulsorily delisted by the stock exchanges on account of, among other things, violation of stock exchange by-laws.
No company can apply for permission to delist
1. pursuant to a buy back of equity shares or preferential allotment made bya company
2. unless a period of 3 years has elapsed since the listing
3. if any instrument issued by the company which are convertible into the same class of equity shares are outstanding, delisting is disallowed.
The Delisting Regulations allow a company to delist its equity shares from all or only recognized stock exchanges on which they are listed, provided an exit opportunity is given to shareholders.
- An exit opportunity need not be given to the shareholders in cases where the securities continue to be listed on a stock exchange having nationwide trading terminals i.e. presently NSE & BSE.
- When an exit option is required, the Delisting Regulations require a promoter or an acquirer intending to delist securities of a company is required to obtain the prior approval of the shareholders by a special resolution, provided that the special resolution shall be acted upon, only if the votes cast by the public shareholders in favour of the proposal amount to at least twice the number of votes cast by the public shareholders against it, make a public announcement in the manner provided for in the Delisting Regulations and make in principle application to and obtain final approval of the stock exchanges within one year of the passing of the shareholders resolution for delisting.
The floor price for delisting will be determined by calculating the average of the weekly high and low of the closing prices during the last 26 weeks or 2 weeks preceding the date on which the recognized stock exchange were notified. Upon closure of open offer process, all shareholders whose equity shares are verified will be paid the final price stated in the public announcement within 10 working days.