SEBI Guidelilnes

Securities and Exchange Board of India (Delisting of Securities) Guidelines – 2003
  1. Title and Objective
  • Title: Securities and Exchange Board of India (Delisting of Securities) Guidelines 2003
  • Objective: To protect the interest of investors in the securities market.
  1. Definitions

Term

Definition

Act

Securities and Exchange Board of India Act, 1992

Authority

Central Listing Authority established under SEBI (Central Listing Authority) Regulations, 2003

Board

Securities and Exchange Board of India established under the Act

Compulsory Delisting

Delisting of securities of a company by an exchange

Delisting Exchange

Exchange from which the securities of the company are proposed to be delisted in accordance with the Guidelines

Exchange

Any stock exchange recognized under Securities Contracts (Regulation) Act, 1956

Promoter

Includes a person desirous of getting the securities of the company delisted under these Guidelines

Public Shareholding

Shareholding in a company held by persons other than the promoter, the acquirer, or persons acting in concert with him

Schedule

A schedule appended to these Guidelines

Voluntary Delisting

Delisting of securities of a body corporate voluntarily by a promoter, acquirer, or any other person other than the stock exchange(s)

  1. Applicability
  • These guidelines apply to:
    • Voluntary delisting by company promoters
    • Acquisition of shares leading to public shareholding falling below specified limits
    • Cases where management control holders seek to consolidate their holdings
    • Compulsory delisting by stock exchanges
  1. Words Interpretation
  • Words and expressions not defined in the Guidelines shall have the same meaning as under the Act or related statutes.
  1. Delisting of Securities (Voluntary) of a Listed Company
  • A company may delist from the stock exchange if its securities have been listed for a minimum of 3 years.
  • An exit opportunity shall be provided to investors through a book-building process.
  1. Procedure for Voluntary Delisting
  • Promoters or acquirers seeking delisting must:
    • Obtain shareholder approval via special resolution
    • Make a public announcement
    • Submit an application to the delisting exchange
    • Comply with additional conditions specified by stock exchanges
  1. Public Announcement for Voluntary Delisting
  • Before delisting application, promoters or acquirers must make a public announcement including specified information.
  1. Exit Price for Voluntary Delisting of Securities
  • The exit price is determined through the book-building process.
  • Offer price includes a floor price and may not have a ceiling.
  1. Right of Promoter
  • The promoter may decide not to accept the exit price and must then ensure public shareholding meets minimum limits within 6 months.
  1. Public Announcement of Final Price
  • Final price determined through book building must be publicly announced within 2 working days.
  1. Delisting from One or More Stock Exchanges
  • Exit offer made to shareholders when delisting from exchanges other than those with nationwide trading terminals.
  1. Minimum Number of Shares to be Acquired
  • If the offer results in acceptance of fewer shares than outstanding, and public shareholding does not fall below minimum limits, the offer fails.
  1. Payment of Consideration
  • Consideration for delisting must be paid in cash by the promoter or acquirer.
  1. Delisting of One or All Class of Securities
  • Companies may delist one or all class of securities subject to specified provisions.
  1. Compulsory Delisting of Companies by Stock Exchanges
  • Stock exchanges may delist companies suspended for a minimum of six months for non-compliance with Listing Agreement.
  1. Rights of Securities Holders in Case of Compulsory Delisting
  • Promoters must compensate security-holders by paying fair value of securities held.
  1. Delisting Pursuant to Rights Issue
  • Delisting may occur if rights issue leads to public shareholding falling below permissible levels.
  1. Reinstatement of Delisted Securities
  • Reinstatement permitted after 2 years with application scrutiny by Central Listing Authority.

Schedules

  • Schedule I: Contents of Public Announcement
  • Schedule II: The Book Building Process
  • Schedule III: Norms and Procedure for Delisting of Securities by Stock Exchanges