SEBI has notified amendments in delisting rules allowing companies to delist shares through a fixed price mechanism as an alternative to the reverse book building process (RBB). This move aimed at facilitating ease of doing business for listed firms. These critical changes in the delisting regulations provide promoters better chances to take their firms private through a fixed price framework. In addition to the reverse book building process, SEBI introduced this fixed price process where promoters can offer to buy back all shares from the public at least 15 percent premium to its “fair price”. The acquirer will be eligible for delisting through a fixed price process only if the shares of the company are frequently traded. SEBI has also reduced the threshold under the counter offer mechanism to 75 percent from 90 percent of public shareholders. Under the RBB process, the delisting process is considered successful if the post-offer aggregate shareholding of the promoter or the acquirer reaches 90 percent.

The amendments also provide for special provisions for delisting of investment holding company. For delisting of investment holding companies, SEBI specified that to be eligible, the holdco should have at least 75 percent of its fair value comprising direct investments in equity shares of other listed companies. This fair value will be determined through a joint report by two independent valuers and the shares of the holdcos which get delisted will not be permitted to seek relisting for a period of three years from the date of delisting.

Click the icon to access SEBI Notification-