The Securities and Exchange Board of India (SEBI) has tightened norms for delisting of companies in order to give more say for shareholders. A company can be delisted only if the promoters hike their stake to 90 per cent, or acquire at least 50 per cent through a share purchase offer, thus providing the shareholders an exit opportunity, SEBI said in a notification.
Companies, however, cannot use the funds gathered directly or indirectly to finance purchase of shares to facilitate an exit opportunity for the shareholders, SEBI said.
Promoters of the company cannot seek listing for 10 years from the date of delisting
No company shall apply for and no recognised stock exchange shall permit delisting of equity shares of a company pursuant to a buy back of equity shares by the company, or pursuant to a preferential allotment made by the company or before three years from the listing of that class of equity shares on any recognised stock exchange; or if any instruments issued by the company, which are convertible into the same class of equity shares that are sought to be delisted, are outstanding.
The delisting offer should be initiated within 55 working days from the date of the public announcement.
In case of small firms, SEBI said, under a special provision, shares of a company with up to Rs1 crore paid-up capital could be delisted from all exchanges, if the stock did not trade for one year.
A company can also be de-listed if it has 300 or less public shareholders and the paid-up value of these shares was not more than Rs100 crore.
No company shall also apply for and no recognised stock exchange shall permit delisting of convertible securities,SEBI clarified.
No promoter shall directly or indirectly employ the funds of the company to finance an exit opportunity or an acquisition of shares. No promoter or other person shall employ any device, scheme or artifice to defraud any shareholder or other person; or engage in any transaction or practice that operates as a fraud or deceit upon any shareholder or other person; or engage in any act or practice that is fraudulent, deceptive or manipulative – in connection with any delisting sought or permitted or exit opportunity given or other acquisition of shares made under these regulations.
Subject to the provisions of these regulations, a company may delist its equity shares from all the recognised stock exchanges where they are listed or from the only recognised stock exchange where they are listed:
Provided that all public shareholders holding equity shares of the class which are sought to be delisted are given an exit opportunity in accordance with Chapter IV.