The Securities and Exchange Board of India (Sebi), making voluntary delisting easier, has notified new norms that will reduce the time taken by companies for completing the delisting process and provide for relaxation on case-to-case basis.
The changes are aimed at making the existing regulatory framework on delisting more effective.
The timeline for completing the delisting process has been reduced to 76 working days from 137 calendar days (about 117 working days). At times, the process takes over a year.
Among other changes, stock exchanges would be given five working days to give their in-principle approval for delisting.
Apart from reducing the timeline, Sebi has retained the reverse book-building process for discovering the price of shares for the purpose of delisting.
Delisting would be considered successful only if at least 25 per cent of the public shareholders participate in the reverse book-building process.
Besides, shareholding of the acquirer, together with the shares tendered by public shareholders, should reach 90 per cent of the company's total share capital.
To ensure that a delisting plan has been decided in a fair manner, the capital market regulator said that a company's board would have to approve it only after a due diligence process, for which it can appoint a merchant banker on behalf of the firm and the promoter.
Further, the company's board would have to certify that the company is in compliance with applicable securities law and that it would be in the interest of shareholders.
Companies having paid up capital of not more than Rs 10 crore, and networth that does not exceed Rs 25 crore, as on the last day of the previous financial year would be exempted from following the reverse book-building process.
The exemption would be available only if there was no trading in the shares of the company in the last one year from the date of the board resolution authorising the company to go for delisting, and trading of shares of the company had not been suspended for any non-compliance during the same period.
Depending on reasons put in writing, market watchdog Sebi would consider relaxing the strict enforcement of delisting regulations.
"Sebi may for reasons recorded in writing, grant relaxation from strict enforcement of any of the requirements of these regulations, if the regulator is satisfied that the relaxation is in the interests of investors in securities and the securities market," the regulatory body said.
To seek exemption, the promoter or the acquirer would have to pay a non-refundable fee of Rs 50,000 to Sebi along with an application giving details for seeking such exemption.