Sebi committee recommends delisting norms

Mumbai: To enable minority shareholders to get an exit route in case a company delists its shares from the exchanges, a Securities and Exchange Board of India (Sebi) committee has recommended that the open offer price should be determined through book-building process.

The minimum exit price will, however, be the average of the traded price of the previous 26 weeks, the panel has suggested.

The committee on delisting of shares, headed by the Sebi executive director Pratip Kar, has said that no company can use the buyback provision to delist its shares. It has also suggested setting up a central listing authority (CLA) to bring uniformity to listing applications. It has also recommended that securities can be relisted after two years of delisting.

The committee has recommended that the offer price should have a floor price, which will be the average of 26 weeks traded price, and no ceiling. Market forces of demand and supply through book-building process should help discover the correct exit price, it said. Stock exchanges will provide the infrastructure for investors to see the price on the screen to bring transparency to the delisting process.

In the event of securities being delisted, the acquirer should allow a further period of six months for any of the remaining shareholders to tender shares at the same price.

CLA will have a maximum of 11 members selected from the legal fraternity and those with expertise in securities market regulation.