Regulation 8 - Conditions and procedure for delisting where exit opportunity is required - Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009

Conditions and procedure for delisting where exit opportunity is required 8. (1) Any company desirous of delisting its equity shares under the provisions of Chapter III shall, except in a case falling under clause (a) of regulation 6, - (a) obtain the prior approval of the board of directors of the company in its meeting; (b) obtain the prior approval of shareholders of the company by special resolution passed through postal ballot, after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution: Provided that the special resolution shall be acted upon 1 [***] only if the votes cast by public shareholders in favour of the proposal amount to at least two times the number of votes cast by public shareholders against it. (c) make an application to the concerned recognised stock exchange for in-principle approval of the proposed delisting in the form specified by the recognised stock exchange; and (d) within one year of passing the special resolution, make the final application to the concerned recognised stock exchange in the form specified by the recognised stock exchange: Provided that in pursuance of special resolution as referred to in clause (b), passed before the commencement of these regulations, final application shall be made within a period of one year from the date of passing of special resolution or six months from the commencement of these regulations, whichever is later. 2 [(1A) Prior to granting approval under clause (a) of sub-regulation (1), the board of directors of the company shall,- (i) make a disclosure to the recognized stock exchanges on which the equity shares of the company are listed that the promoters/acquirers have proposed to delist the company; (ii) appoint a merchant banker to carry out due-diligence and make a disclosure to this effect to the recognized stock exchanges on which the equity shares of the company are listed; (iii) obtain details of trading in shares of the company for a period of two years prior to the date of board meeting by top twenty five shareholders as on the date of the board meeting convened to consider the proposal for delisting, from the stock exchanges and details of off-market transactions of such shareholders for a period of two years and furnish the information to the merchant banker for carrying out due-diligence; (iv) obtain further details in terms of sub-regulation (1D) of regulation 8 and furnish the information to the merchant banker. (1B) The board of directors of the company while approving the proposal for delisting shall certify that : (i) the company is in compliance with the applicable provisions of securities laws; (ii) the acquirer or promoter or promoter group or their related entities, are in compliance with sub-regulation (5) of regulation 4; (iii) the delisting is in the interest of the shareholders. (1C) For certification in respect of matters referred to in sub-regulation (1B), the board of directors of the company shall take into account the report of the merchant banker as specified in sub-regulation (1E) of regulation 8. (1D) The merchant banker appointed by the board of directors of the company under clause (ii) of sub-regulation (1A) shall carry out due-diligence upon obtaining details from the board of directors of the company in terms of clause (iii) of sub-regulation (1A) of regulation 8 Provided that if the merchant banker is of the opinion that details referred to in clause (iii) of sub-regulation (1A) of regulation 8 are not sufficient for certification in terms of sub-regulation (1E) of regulation 8, he shall obtain additional details from the board of directors of the company for such longer period as he may deem fit. (1E) Upon carrying out due-diligence as specified in terms of sub-regulation (1D) of regulation 8, the merchant banker shall submit a report to the board of directors of the company certifying the following: (a) the trading carried out by 3 [any of the acquirer or promoter or promoter group entity] or their related entities was in compliance or not, with the applicable provisions of the securities laws; andn 4 [(b) any of the acquirer or promoter or promoter group entity or persons acting in concert or their related entities have carried out or not any transaction to facilitate the success of the delisting offer which is in contravention of the provisions of sub-regulation (5) of regulation 4.]] (2) An application seeking in-principle approval for delisting under clause (c) of sub-regulation (1) shall be accompanied by an audit report as required under regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 in respect of the equity shares sought to be delisted, covering a period of six months prior to the date of the application. (3) An application seeking in-principle approval for delisting shall be disposed of by the recognised stock exchange within a period not exceeding 5 [five] working days from the date of receipt of such application complete in all respects. (4) While considering an application seeking in-principle approval for delisting, the recognised stock exchange shall not unfairly withhold such application, but may require the company to satisfy it as to - (a) compliance with clause (b) of sub-regulation (1); (b) the resolution of investor grievances by the company; (c) payment of listing fees to that recognised stock exchange; (d) the compliance with any condition of the 6 [Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015] with that recognised stock exchange having a material bearing on the interests of its equity shareholders; (e) any litigation or action pending against the company pertaining to its activities in the securities market or any other matter having a material bearing on the interests of its equity shareholders; (f) any other relevant matter as the recognised stock exchange may deem fit to verify. (5) A final application for delisting made under clause (d) of sub regulation (1) shall be accompanied with such proof of having given the exit opportunity in accordance with the provisions of Chapter IV, as the recognised stock exchange may require. ********** 1 Words if and omitted by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018. 2 Inserted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015. 3 Substituted for the words the entities belonging to acquirer or promoter or promoter group by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018. 4 Substituted by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018. Prior to the same, the clause read as follows: (b) entities belonging to acquirer or promoter or promoter group or their related entities have carried out or not, any transaction to facilitate the success of the delisting offer which is not in compliance with the provisions of sub-regulation (5) of regulation 4. 5 Substituted for word thirty by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015. 6 Substituted for the words listing agreement by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018