9911796707
TMI BlogSecurities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and variations shall be construed accordingly,- a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992); b) "acquirer" includes a person - (i) who decides to make an offer for delisting of equity shares of the company along with the persons acting in concert in accordance with regulation 5A of the Takeover Regulations as amended from time to time ; or (ii) who is the promoter or part of the promoter group along with the persons acting in concert. c) "Board" means the Securities and Exchange Board of India established under section 3 of the Act; d) "bidding period" means the period within which shareholders may tender their shares in acceptance of the offer for delisting of equity shares of the company made under these regulations; e) "control" shall have the same meaning as assigned to it under the Takeover Regulations as amended from time to time; f) "company" means a company within the meaning of sub-section (20) of section 2 of the Companies Act, 2013 (18 of 2013) and includes a body corporate or corporation established under any enactment for the time being in force, whose equity shares are listed on a recognised stock exchange; g) ..... 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Secretary in practice, who is either practicing individually or as a sole proprietor or as a partner of a Peer Reviewed Practice Unit , holding a valid certificate of peer review issued by the Institute of Company Secretaries of India; t) "public shareholding" shall have the same meaning as assigned to it under rule 2(e) of the Securities Contracts (Regulation) Rules, 1957 as amended from time to time and "public shareholders" shall be construed accordingly; u) "persons acting in concert" shall have the same meaning as assigned to it under the Takeover Regulations as amended from time to time; v) "promoter" shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time; w) "promoter group" shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time; x) "recognised stock exchange" means any stock exchange that has been granted recognition under section 4 of Securities Contracts (Regulation) Act, 1956 (42 of 1956) as amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price, by whatever name called, at which a promoter or any entity belonging to the promoter group or any other shareholder, directly or indirectly, is provided an exit opportunity: Provided further that the details of delisting of such shares along with the justification for the exit price in respect of the proposed delisting shall be disclosed to the recognized stock exchange(s) where the shares are listed within one day of approval of the resolution plan under section 31 of the Insolvency Code. Conditions for delisting 4. (1) Neither any company shall apply for nor any recognised stock exchange shall permit delisting of equity shares of a company:- (a) unless a period of three years has elapsed since the listing of that class of equity shares on any recognized stock exchange; (b) if any instrument issued by the company, which is convertible into the same class of equity share(s) that is sought to be delisted, is outstanding; (c) pursuant to a buyback of equity shares by the company, including a buyback pursuant to consolidation or division of all or part of the equity share capital of the company, unless a period of six months has elapsed from the date of completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty shares under the provisions of regulation 5 of these regulations shall - (a) obtain the prior approval of its Board of Directors; (b) make an application to the relevant recognised stock exchange(s) for delisting its equity shares; (c) issue a public notice of the proposed delisting from the relevant stock exchange(s) in at least one English national newspaper with wide circulation, one Hindi national newspaper with wide circulation in their all India editions and one vernacular newspaper of the region where the relevant stock exchange(s) is located; (d) disclose the fact of delisting in its first annual report post delisting. (2) The public notice issued under clause (c) of sub-regulation (1) shall mention the name(s) of the recognised stock exchange(s) from which the equity shares of the company are intended to be delisted, the reasons for such delisting and the fact of continuation of listing of equity shares on the recognised stock exchange(s) having nationwide trading terminals. (3) An application for delisting made under clause (b) of sub-regulation (1) shall be disposed of by the recognised stock exchange(s) within a period not exceeding thirty working days from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary and provide the following information to such Company Secretary for carrying out duediligence:- (a) the details of buying, selling and dealing in the equity shares of the company by the acquirer or its related entities during the period of two years prior to the date of board meeting held to consider the proposal for delisting, including the details of the top twenty five shareholders, for the said period; (b) the details of off-market transactions of all the shareholders mentioned in clause (a) for a period of two years; (c) any additional information, including the information mentioned in clauses (a) and (b) for a longer period of time, sought by the Company Secretary if the Company Secretary is of the opinion that the information provided under clauses (a) and (b) is not sufficient for providing the certification in terms of sub-regulation (3). (3) After obtaining the information from the Board of Directors of the company under sub-regulation 2, the Company Secretary shall carry out the due-diligence and submit a report to the Board of Directors of the company certifying that the buying, selling and dealing in the equity shares of the company carried out by the acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the special resolution or receipt of any other statutory or regulatory approval, whichever is later. (2) The application seeking in-principle approval for the delisting of equity shares shall be accompanied by an audit report as required under regulation 76 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 in respect of the equity shares sought to be delisted, covering a period of six months prior to the date of the application. (3) Such application seeking in-principle approval for the delisting of the equity shares shall be disposed of by the recognised stock exchange within a period not exceeding, fifteen working days from the date of receipt of such application that is complete in all respects. (4) The recognised stock exchange shall not unfairly withhold such an application, but may require the company to satisfy or inform it as regards - (a) compliance with regulations 10 and 11 of these regulations; (b) resolution of investor grievances by the company; (c) payment of listing fees due to the recognised stock exchange; (d) compliance with any provision of the Securities and Exchange Board of India (Listing Obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited with a Scheduled Commercial Bank or a bank guarantee in favour of the Manager to the offer or a combination of both. (6) Where the escrow account consists of a deposit with a Scheduled Commercial Bank, the acquirer shall, while opening the account, authorize the Manager to the offer to make fund transfers through electronic mode or such other mode permitted by the Reserve Bank of India, and to instruct the bank to issue banker's cheques or demand drafts for the amount lying to the credit of the escrow account, for the purpose(s) mentioned in these regulations, and the amount in such account, if any, remaining after full payment of consideration for the equity shares tendered in the delisting offer and those tendered under sub-regulation (1) of regulation 26 of these regulations shall be released to the acquirer. (7) Where the escrow account consists of a bank guarantee, such bank guarantee shall be valid till payments are made in respect of all shares tendered under sub-regulation (1) of regulation 26 of these regulations. (8) In case of failure of the delisting offer, ninety nine percent of the amount lying in the escrow account shall be released to the acquirer within on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosures made in the detailed public announcement and such other disclosures as may be necessary for the shareholders to take an informed decision. (5) The public shareholders shall have the right to inspect all the documents as referred in the letter of offer and the Manager to the offer shall facilitate the inspection. (6) The letter of offer shall be accompanied with a Form for the use of public shareholders for the purpose of either creating a lien or tendering the physical shares, as the case may be. (7) An eligible public shareholder may participate in the offer for the delisting of equity shares and make bids even without receiving the Form or letter of offer and such shareholder may tender shares in the manner specified by the Board in this regard. Bidding mechanism 17. (1) The bidding period shall start not later than seven working days from the date of the detailed public announcement and shall remain open for five working days. (2) The acquirer shall facilitate tendering of shares by the shareholders and settlement of the same, through the stock exchange mechanism as specified by the Board. (3) The Manager to the offer shall ensure that the outcome of the reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the delisting offer, which shall be higher than the floor price calculated in terms of sub-regulation (2). (5) The acquirer shall also have the option to revise the indicative price upwards before the start of the bidding period and the same shall be duly disclosed to the shareholders. (6) The acquirer may, if it deems fit, pay a price higher than the discovered price determined in terms of sub-regulation (1). Minimum number of equity shares to be acquired 21. An offer made under Chapter III of these regulations or a counter offer made by the acquirer in terms of sub-regulation (4) of regulation 22 of these regulations, as the case may be, shall be deemed to be successful if,- (a) the post offer shareholding of the acquirer, along with the shares tendered / offered by public shareholders accepted as eligible bids at the discovered price or the counter offer price, as the case may be, reaches ninety percent of the total issued shares of that class excluding the following: (iv) shares held by custodian(s) against which depository receipts have been issued overseas; (v) shares held by a Trust set up for implementing an Employee Benefit scheme under the Securities and Exchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... values so computed shall be treated as the book value. Failure of the offer 23. (1) The delisting offer shall be considered to have failed under the following circumstances:- (a) the minimum number of shares are not tendered / offered as provided under clause (a) of regulation 21 of these regulations. Explanation,- If a counter offer has been made by the acquirer in terms of sub-regulation (4) of regulation 22 of these regulations, the failure of the said counter offer shall be considered in accordance with clause (a); or (b) the price discovered through the reverse book building process is rejected by the acquirer. (2) In case of failure of the delisting offer, (a) the equity shares tendered / offered in terms of Schedule II or Schedule IV of these regulations as the case may be, shall be released- (i) on the date of disclosure of the outcome of the reverse book building process under sub-regulation (3) of regulation 17 of these regulations if the minimum number of shares as provided under clause (a) of regulation 21 of these regulations are not tendered / offered; (ii) on the date of making public announcement for the failure of the delisting offer under sub-regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered by the acquirer in terms of sub-regulation (6) of regulation 20 of these regulations, is higher than the floor price or the indicative price, as the case may be, the payment shall be made within five working days from the date of the public announcement under sub-regulation (4) of regulation 17 of these regulations. (2) The acquirer shall be liable to pay interest at the rate of ten percent per annum to all the shareholders, whose bids have been accepted in the delisting offer, if the price payable in terms of sub-regulation (1) is not paid to all the shareholders within the time specified thereunder: Provided that in case the delay was not attributable to any act or omission of the acquirer or was caused due to the circumstances beyond the control of the acquirer, the Board may grant waiver from the payment of such interest. Final application to the stock exchange after successful delisting 25. (1) Within five working days from the date of making the payment to the public shareholders in terms of regulation 24 of these regulations, the acquirer shall make the final application for delisting to the relevant recognized stock exchange(s) in the Form specified by such stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the public thereafter by the stock exchange(s), disclosing the following: (i) number of remaining public shareholders at the beginning and end of the quarter; and (ii) details of public shareholders who availed the exit opportunity during the quarter. (2) The stock exchange(s) shall monitor the compliance of sub-regulation (1). Obligations of the company 28. (1) Upon receipt of the detailed public announcement, the Board of Directors of the company shall constitute a Committee of independent directors to provide reasoned recommendations on the delisting offer. (2) The Committee of independent directors shall provide its written reasoned recommendations on the proposal for delisting of equity shares to the Board of Directors of the company and in relation thereto, the Committee may also seek external professional advice at the expense of the company. (3) The Committee of independent directors, while providing reasoned recommendations on the delisting proposal, shall disclose the voting pattern of the meeting in which the said proposal was discussed. (4) The company shall publish such recommendations of the Committee of independent directors, along with the details of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offer for delisting are true, fair and adequate in all material aspects, not misleading and based on reliable sources that shall be mentioned wherever necessary. (3) The acquirer and the persons acting in concert with it shall be jointly and severally responsible for the fulfilment of the applicable obligations under these regulations. (4) The acquirer shall ensure to acquire the shares offered by the remaining public shareholders at the same price at which the equity shares had been delisted for a minimum period of one year. (5) No acquirer or persons acting in concert with it shall sell shares of the company during the delisting period. Cancellation of outstanding depository receipts 31. After delisting of equity shares from all the recognized stock exchanges having nationwide trading terminals, the company shall be required to compulsorily cancel all the outstanding depository receipts issued overseas and change them into the underlying equity shares in the home jurisdiction after termination of the depository receipts program(s), within one year of such delisting. CHAPTER V COMPULSORY DELISTING Compulsory delisting by a stock exchange 32. (1) A recognised stock ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses of the promoters of the company who would be liable under sub-regulation (4) of regulation 33 of these regulations; (b) inform all other stock exchanges where the equity shares of the company are listed, about such delisting; and (c) upload a copy of the said order on its website. (6) The provisions of Chapter IV of these regulations shall not be applicable to a compulsory delisting made by a recognised stock exchange under this Chapter. Rights of public shareholders in case of compulsory delisting 33. (1) Where the equity shares of a company are delisted by a recognised stock exchange under this Chapter, the recognised stock exchange shall appoint an independent valuer(s) who shall determine the fair value of the delisted equity shares. (2) The recognised stock exchange shall form a Panel of expert valuers and from the said Panel, the valuer(s) for the purposes of sub-regulation (1) shall be appointed. (3) The value of the delisted equity shares shall be determined by the valuer(s) having regard to the factors mentioned in sub-regulation (2) of regulation 20 of these regulations. (4) The promoter(s) of the company shall acquire the delisted equity shares from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MALL COMPANIES Delisting of equity shares of small companies 35. (1) Equity shares of a company may be delisted from all the recognised stock exchanges where they are listed, without following the procedure in Chapter IV of these regulations, if,- (a) the company has a paid up capital not exceeding ten crore rupees and net worth not exceeding twenty five crore rupees as on the last date of preceding financial year; (b) the number of equity shares of the company traded on each such recognised stock exchange during the twelve calendar months immediately preceding the date of board meeting held for consideration of the proposal referred to in sub-regulation (4) of regulation 10 of these regulations is less than ten per cent of the total number of shares of the company: Provided that where the share capital of a particular class of shares of the company is not constant throughout such period, the weighted average of the shares of such class shall represent the total number of shares of such class of the company; (c) the company has not been suspended by any of the recognised stock exchanges having nationwide trading terminals for any non-compliance in the preceding one year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the payment of such interest. (5) The relevant recognised stock exchange may delist such equity shares upon satisfying itself of compliance with this regulation. Part - B SPECIAL PROVISIONS FOR COMPANIES LISTED ON INNOVATORS GROWTH PLATFORM Delisting of equity shares of companies listed on innovators growth platform after making an initial public offer 36. (1) The provisions of these regulations, shall mutatis mutandis apply to delisting of equity shares of a company listed on innovators growth platform after making a public issue, subject to the provisions of sub-regulation (2). (2) A company whose equity shares are listed and traded on the innovators growth platform pursuant to an initial public offer may be delisted from the innovators growth platform, if - (a) such delisting is approved by the Board of Directors of the company; (b) such delisting is approved by the shareholders of the company by a special resolution passed through postal ballot or e-voting, 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 only if the votes cast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e public shareholders against it; e) the shares of the listed holding company and the subsidiary company are listed for at least 3 years and shall not be suspended at the time of taking this route; f) the subsidiary company has been a listed subsidiary of the listed holding company for the past three years; g) no adverse orders have been passed by the Board in the past 3 years against the listed holding company and the listed subsidiary company; h) no further restructuring shall be undertaken by the listed holding company for a period of 3 years from the date of the Order of the Court or Tribunal approving the scheme of arrangement; i) the equity shares of the listed subsidiary so delisted, shall not be allowed to seek relisting for a period of three years from the date of delisting and such relisting shall be in terms of sub-regulation (3) and (4) of regulation 40 of these regulations; and, j) the valuation of shares of the listed subsidiary per share shall not be less than sixty days volume weighted average price. Explanation,- The reference date for computing the volume weighted average price would be the date on which the recognized stock exchange(s) was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shall be subject to provisions of law relating to listing of equity shares of unlisted companies: Provided that the company shall make appropriate disclosures in the offer document about the reasons for seeking listing after delisting. CHAPTER VIII Power of the Board to issue clarifications 41. In order to remove any difficulties in the application or interpretation of these regulations, the Board may issue clarifications and guidelines from time to time. Power to relax strict enforcement of the regulations. 42. (1) The Board may, in the interest of investors or for the development of the securities market, relax the strict enforcement of any requirement of these regulations, if the Board is satisfied that- a) the requirement is procedural in nature; or b) any disclosure requirement is not relevant for a particular class of industry or company; or c) the non-compliance was caused due to factors beyond the control of the acquirer. (2) For seeking relaxation under sub-regulation (1), the acquirer or the company shall file an application with the Board, supported by a duly sworn affidavit, providing details of such relaxation of the regulations and the grounds on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the repealed regulations, any penalty, forfeiture or punishment incurred in respect of any contravention or offence committed against the repealed regulations, or any investigation, proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, shall remain unaffected as if the repealed regulations had never been repealed; (c) nothing contained in clause (a) shall apply to any delisting offer in respect of which a public announcement has been made under the repealed regulations, and such delisting offer shall be required to be continued and completed under the repealed regulations. (3) subsequent to the repeal of Securities and Exchange Board of India (Delisting of equity shares) Regulations, 2009, any reference thereto in any other regulations, guidelines or circulars issued by the Board shall be deemed to be a reference to the corresponding provisions of these regulations. SCHEDULE I See regulation 15(2) CONTENTS OF THE DETAILED PUBLIC ANNOUNCEMENT 1. The floor price and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- (a) the company is in compliance with the applicable provisions of securities laws; (b) the acquirer or its related entities have not carried out any transaction during the aforesaid period to facilitate the success of the delisting offer which is not in compliance with the provisions of sub-regulation (5) of regulation 4 of these regulations; (c) the delisting, in their opinion, is in the interest of the shareholders. 20. Name of compliance officer of the company. SCHEDULE II See regulation 20(1) THE REVERSE BOOK BUILDING PROCESS 1. The reverse book building process shall be made through an electronically linked transparent facility and the acquirer shall enter into an agreement with a stock exchange for this purpose. 2. The detailed public announcement and letter of offer shall be filed without delay with the stock exchange mentioned in clause 1 and such stock exchange shall forthwith post the same on its website. 3. The minimum number of bidding centres shall be: (a) the four metropolitan centres situated at Mumbai, Delhi, Kolkata and Chennai; (b) such cities in the region in which the registered office of the company is situated, as are specified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which are held by following: (i) a custodian(s) holding shares against which depository receipts have been issued overseas; (ii) a trust set up for implementing an Employee Benefit scheme under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (iii) inactive shareholders such as vanishing companies, struck off companies, shares transferred to Investor Education and Protection Fund account and shares held in terms of sub-regulation (4) of regulation 39 read with Schedule VI of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. 14. An illustration for arriving at the discovered price is given in the table below: Bid price (₹) Number of Investors Demand (Number of shares) Cumulative demand (Number of shares) 550 5 2,50,000 2,50,000 565 8 4,00,000 6,50,000 575 10 2,00,000 8,50,000 585 4 4,00,000 12,50,000 595 6 1,20,000 13,70,000 → Final Offer Price 600 5 1,30,000 15,00,000 605 3 2,10,000 17,10,000 610 3 1,40,000 18,50,000 615 3 1,50,000 20,00,000 620 1 5,00,000 25,00,000 Total 48 25,00,000 Not applicable Assuming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reverse book building bidding process 2. Publication of counter offer public announcement in the same newspapers where the detailed public announcement was made Within four working days from the closure of the reverse book building bidding process 3. Option to withdraw the shares tendered during the reverse book building process Within ten working days from the counter offer public announcement 4. Dispatch of "Letter of offer for counter offer" Within four working days from the closure of the reverse book building bidding process 5. Opening of counter offer bidding process Not later than seven working days from the date of public announcement 6. Closing of counter offer bidding process Not later than five working days from the opening of counter offer bidding process 7. Public announcement of success/failure of counter offer in the same newspaper in which detailed public announcement under sub-regulation (1) of regulation 15 was made Not later than five working days of the closing of the counter offer bidding process 8. Payment of consideration Not later than ten working days from the closing of counter offer or through the secondary market settlement mechan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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