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TMI BlogSecurities and Exchange Board of India (Delisting of Securities) Guidelines 2003X X X X Extracts X X X X X X X X Extracts X X X X ..... lar F.No. 14(2)/SE/85 dated September 23, 1985 issued by Ministry of Finance, providing for listing at regional stock exchanges. You are advised to take appropriate action immediately. Yours faithfully, P. K. BINDLISH SECURITIES AND EXCHANGE BOARD OF INDIA (DELISTING OF SECURITIES) GUIDELINES - 2003 1. These guidelines shall be called "Securities and Exchange Board of India (Delisting of Securities) Guidelines 2003". 2. These guidelines are being issued under section 11(1) of SEBI Act, 1992, read with sub-section (2) of section 11A of SEBI Act, with the objective to protect the interest of investors in the securities market. 3. Definitions (1) In these Guidelines, unless the context otherwise requires :- (a) 'Act' means the Securities and Exchange Board of India Act, 1992; (b) 'Authority' means the Central Listing Authority established under the Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003; (c) 'Board' means the Securities and Exchange Board of India established under section 3 of the Act; (d) 'compulsory delisting' means delisting of the securities of a company by an exchange; (e) 'delisting exchange' means the exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may have the effect of company being delisted; (e) companies which may be compulsorily delisted by the stock exchanges; Provided that company shall not be permitted to use the buy-back provision to delist its securities. 5. Delisting of Securities (Voluntary) of a listed company (1) A company may delist from stock exchange where its securities are listed : Provided that the securities of the company have been listed for a minimum period of 3 years on any stock exchange : Provided further that an exit opportunity has been given to the investors for the purpose of which an exit price shall be determined in accordance with the "book building process" described in clauses 7 (10), (13) & (14) of these guidelines. (2) An exit opportunity need not be given in cases where securities continue to be listed in a stock exchange having nationwide trading terminals. Explanation : For the purposes of these guidelines, stock exchange having nationwide trading terminals means the Stock Exchange, Mumbai, the National Stock Exchange and any other stock exchange, which may be specified by the Board. 6. Procedure for voluntary delisting (1) Any promoter or acquirer desirous of delisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he possibility of price manipulation and keep under special watch the securities for which announcement for delisting has been made. (7) To ascertain the genuineness of physical securities if tendered and to avoid the bad delivery, Registrar and Transfer Agent shall co-operate with the Clearing House/Clearing Corporation to determine the quality of the papers up-front. (8) If the quantity eligible for acquiring securities at the final price offered does not result in public shareholding falling below required level of public holding for continuous listing, the company shall remain listed. (9) The paid-up share capital shall not be extinguished as in the case of buyback of securities. (10) In case of partly paid-up securities, the price determined by the book building process shall be applicable to the extent the call has been made and paid. (11) The amount of consideration for the tendered and accepted securities shall be settled in cash. 9. Right of promoter (1) The promoter may not accept the securities at the offer price determined by the book building process. (2) Where the promoter decides not to accept the offer price so determined : (a) he shall not make an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he offer for delisting results in acceptance of a fewer number of shares than the total shares outstanding and as a consequence the public shareholding does not fall below the minimum limit specified by the listing conditions or the listing agreement, the offer shall be consi-dered to have failed and no securities shall be acquired pursuant to such offer. 13. Payment of consideration (1) The payment of consideration for delisting of securities shall be paid in cash by the promoter or acquirer. 14. Delisting of one or all class of securities (1) A company may delist one or all of its class of securities subject to the provisions of this clause. (2) If the equity shares of a company are delisted, the fixed income securities may continue to remain listed on the stock exchange. (3) A company which has a convertible instrument outstanding, it shall not be permitted to delist its equity shares till the exercise of the conversion options. 15. Compulsory delisting of companies by stock exchanges (1) The Stock Exchanges may delist companies which have been suspended for a minimum period of six months for non-compliance with the Listing Agreement. (2) The Stock Exchanges may al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in listed. (2) In case the rights issue is not fully subscribed, which may result in the public shareholding falling below the permissible minimum level as specified in the listing condition or listing agreement, the promoter(s) of the company shall be required to delist by providing an exit opportunity in the manner specified in clause 17(1) of these guidelines or may be required to make offer for sale of their holdings so that the public shareholding is raised to the minimum level specified in the listing agreement or in the listing conditions within a period of 3 months. 18. Reinstatement of delisted securities (1) Reinstatement of delisted securities should be permitted by the stock exchanges with a cooling period of 2 years. In other words, relisting of securities should be allowed only after 2 years of delisting of the securities. It would be based on the respective norms/criteria for listing at the time of making the application for listing and the application will be initially scrutinized by the Central Listing Authority. SCHEDULE I [See Guideline 7(2)] CONTENTS OF THE PUBLIC ANNOUNCEMENT 1. The floor price and how it was reached. 2. The dates of opening and clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point 'trading members' for placing bids on the on-line electronic system. 6. Investors may approach trading members for placing offers on the on-line electronic system. The format of the offer form and the details that it must contain shall be specified. 7. The security-holders desirous of availing the exit opportunity shall deposit the shares offered with the trading members prior to placement of orders. Alternately they may mark a pledge for the same to the trading member. The trading members in turn may place these securities as margin with the exchanges/clearing corporations. 8. The offers placed in the system shall have an audit trail in the form of confirmations which gives broker ID details with time stamp and unique order number. 9. The final offer price shall be determined as the price at which the maximum number of shares has been offered. The acquirer shall have the choice to accept the price. If the price is accepted then the acquirer shall be required to accept all offers upto and including the final price but may not have to accept higher priced offers, subject to clause 15. An illustration is given below: Offer Quantity Offer Price Remarks 50 120 Floor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at value of assets the company should own in order to be listed continuously listed. (4) Track records of compliance of the Listing Agreement requirements for the past three years. * Submission of audited/unaudited results, annual report, other documents required to be furnished to the Exchange, * Book closure Record date with due notice * Payment of listing fee * Service to investors especially with regard to timely return of shares duly transferred, timely payment of dividend, communication of price sensitive information, etc. * Failure to observe good accounting practises in reporting earnings and financial position * Publishing half-yearly unaudited/audited results * Frequent changes in- Accounting year Share transfer agent Registered office Name (5) Promoters'/Directors' track record especially with regard to insider trading, manipulation of share prices, unfair market practises (e.g. returning of share transfer documents under objection on frivolous grounds with a view to creating scarcity of floating stock, in the market causing unjust aberrations in the share prices, auctions, close-out, etc. (Depending upon the trading position of directors or the ..... 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