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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 ..... d April 29, 1998 stands withdrawn. Steps are being taken for withdrawal of the Government of India Circular 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies who voluntarily seek to delist their securities from all or some of the stock exchanges; (d) cases where a person in control of the management is seeking to consolidate his holdings in a company, in a manner which would result in the public shareholding in the company falling below the limit specified in the listing conditions or in the listing agreement that 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manner explained under regulation 20(5) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations. (4) The stock exchange(s) shall provide the infrastructure facility for display of the price at the terminals of the trading members to enable the investors to access the price on the screen to bring transparency to the delisting process. (5) In the event of securities being delisted, the acquirer shall allow a further period of 6 months for any of the remaining shareholders to tender securities at the same price; (6) The stock exchanges shall monitor the 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 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook building process and whether or not the promoter or the acquirer has accepted the price; and (b) communicate to, exchange or exchanges from which delisting is sought to be made, the final price discovered and whether the promoter has accepted the price. 11. Delisting from one or more stock exchanges (1) When a company which is listed on any stock exchange or stock exchanges other than the stock exchanges having nationwide trading terminals, seeks delisting, an exit offer shall be made to the shareholders in accordance with these guidelines. (2) There shall not be any compulsion for the existing company to remain listed on any stock exchange merely because it is a regional stock exchange. 12. Minimum number of shares to be acquired (1) Where the 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. Payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrator having regard to the factors mentioned in Regulation 20 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. (2) The security-holders may enforce their claim to compensation/fair value under this clause through the arbitration mechanism of the exchange in the manner laid down in its byelaws. 17. Delisting pursuant to rights issue (1) In case of rights issue, allotment to the promoters or the persons in control of the management shall be allowed even if they subscribe to unsubscribed portion which may result in public shareholding falling below the permissible minimum level : Provided that the adequate disclosures have been made in the offer document to that effect : Provided further that they agree to buy out the remaining holders at the price of rights issue or make an offer for sale to bring the public shareholding at the level specified in the listing conditions or listing agreement to remain 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al structure. 14. The aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company. 15. Name of compliance officer of the company. 16. It should be signed and dated by the promoter. SCHEDULE II [See Guideline 8(1)] THE BOOK BUILDING PROCESS 1. The book building process shall be made through an electronically linked transparent facility. 2. The number of bidding centres shall not be less than thirty, including all stock exchange centres and there shall be at least one electronically linked computer terminal at all bidding centres. 3. The promoter shall deposit in an escrow account, 100 per cent of the estimated amount of consideration calculated on the basis of the floor price indicated and the number of securities required to be acquired. The provisions of clause 10 of the Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 shall be applicable mutatis mutandis to such escrow account. 4. The offer to buy shall remain open to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anges the final price and the acceptance (or not) of the price by the acquirer. 11. The acquirer shall make the requisite funds available with the exchange/clearing corporation on the final settlement day (which shall be three days from the end of the book build period). The trading members shall correspondingly make the shares available. On the settlement day the funds and securities shall be paid out in a process akin to secondary market settlements. 12. The entire exercise shall only be available for demat shares. For holders of physical certificates the acquirer shall keep the offer open for a period of 15 days from the final settlement day for the shareholders to lodge the certificates with custodian(s) specified by the merchant banker. SCHEDULE III (GUIDELINE 17(1)] NORMS AND PROCEDURE FOR DELISTING OF SECURITIES BY THE STOCK EXCHANGES A. NORMS (1) The percentage of equity capital (floating stock) in the hands of public investors. This may be seen with reference to- Existing paid-up equity capital Market lot Share price - very high, medium, low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not available and even the letters sent by the Exchange return undelivered and the company fails top remain in touch with the Exchange. (7) The company has become sick and unable to meet current debt obligations or to adequately finance operations, or has not paid interest on debentures for the last 2-3 years, or has become defunct, or there are no employees, or liquidator appointed, etc. (8) On the basis of the above norms and other relevant information available about the company, its promoters/directors, project, litigations, etc., a profile of the company should be prepared and then a decision on delisting should be taken by an Exchange. B. PROCEDURE (1) The decision on delisting should be taken by a panel to be constituted by the Exchange comprising the following : (a) Two directors/officers of the Exchange (one director to be a public representative), (b) One representative of the investors (c) One representative from the Central Government (Department of Company Affairs)/Regional Director/Registrar of Companies (d) Executive Director/Secretary of the Exchange (2) ..... 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