Making voluntary delisting easier for companies, capital markets regulator Sebi has notified new regulations that will reduce the time taken for completing the process and provides for relaxation on case-to-case basis.
The changes are aimed at making the existing regulatory framework on delisting more effective.
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 more than a year.
Among others, 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, Sebi 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, the regulator said in a notification dated March 24.
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 has not been suspended for any non-compliance during the same period.
Depending on reasons put in writing, 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," it 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.
The regulator said that no promoter entity would propose delisting of shares, if any entity belonging to promoter group has sold the company's scrips during a period of six months prior to the board meeting in which the delisting proposal was approved.
The notification comes after Sebi's board had approved the new regulations in November last year. Sebi came out with a discussion paper on delisting process in May 2014 and comments were received on aspects such as price discovery and shortening of the process.
Also, Sebi has notified norms to delist the company under 'Substantial Acquisition of Shares and Takeovers' regulations.
As per the regulator, an acquirer would have the option to delist the shares of the company directly through delisting regulations pursuant to triggering takeover norms.
However, if the delisting attempt fails, the acquirer would be required to complete the mandatory open offer process under the Takeover Regulations and pay interest at the rate of 10 per cent per annum for the delayed open offer.
Also, the acquirer would have to an announcement within two working days in respect of such failure in all the newspapers.
In case a competing offer is made, the acquirer would not be entitled to delist the company as well as not be liable to pay interest to the shareholders on account of delay due to competing offer.
According to Sebi, the stock exchange platform would have to be used for offers made under Delisting, Buy Back and Takeover Regulations.