Text read out of this file
1
THE GAZETTE OF INDIA
EXTRAORDINARY
PART III – SECTION 4
PUBLISHED BY AUTHORITY
NEW DELHI, JUNE 10, 2009
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 10th June, 2009
SECURITIES AND EXCHANGE BOARD OF INDIA
(DELISTING OF EQUITY SHARES) REGULATIONS, 2009
No. LAD-NRO/GN/2009-2010/09/165992. - In exercise of the
powers conferred bysection 31 read with section 21A of the
Securities Contracts (Regulation) Act, 1956 (42of 1956), section 30,
sub-section (1) of section 11 and sub-section (2) of section 11A ofthe
Securities and Exchange Board of India Act, 1992 (15 of 1992), the
Board herebymakes the following regulations, namely: -
CHAPTER I
PRELIMINARY
Short title andcommencement.
1. (1) These regulations may be called the Securities and
ExchangeBoard
of
India
(Delisting
of
Equity
Shares)
Regulations,2009.
(2) They shall come into force on the date of their publication inthe
Official Gazette.
Definitions
2. (1) In these regulations, unless the context otherwise requires,
(i) ‘Act’ means the Securities and Exchange Board of India Act,1992
(15 of 1992);
(ii) ‘Board’ means the Securities and Exchange Board of
Indiaestablished under section 3 of the Act;
(iii)‘company’ means a company within the meaning of section 3of
the Companies Act, 1956 (1 of 1956) and includes a bodycorporate or
corporation established under a central Act, stateAct or provincial Act
2
for the time being in force, whose equity shares are listed on a
recognised stock exchange;
(iv)‘compulsory delisting’ means delisting of equity shares of
acompany by a recognised stock exchange under Chapter V ofthese
regulations;
1[(iva)“promotergroup”shallhavethesamemeaning as assigned to
itunder
the
SecuritiesandExchangeBoardofIndia(Issueof
CapitalandDisclosure Requirements) Regulations, 2009]
(v) ‘public shareholders’ means the holders of equity shares,other
than the following:
(a) promoters;
(b) holders of depository receipts issued overseas againstequity shares
held with a custodian and suchcustodian;
(vi)‘recognised stock exchange’ means any stock exchange whichhas
been granted recognition under section 4 of the SecuritiesContracts
(Regulation) Act, 1956;
(vii) ‘Schedule’ means a Schedule appended to theseregulations;
(viii) ‘voluntary delisting’ means delisting of equity shares of
acompany voluntarily on application of the company underChapter
III of these regulations;
(ix)‘working days’ means the working days of the Board.
(2)
The
words
‘control’,
‘person
acting
in
concert’,
‘promoter’,2['acquirer']and ‘public shareholding’ shall have the
meanings respectivelyassigned to them under the 3[Securities and
Exchange Board ofIndia (Substantial Acquisition of Shares and
Takeovers)Regulations, 2011] as amended from time to time.
(3) Words and expressions not defined in these regulations,
but3defined
in
or
under
the
Act
or
the
Securities
Contracts(Regulation) Act, 1956 (42 of 1956) or the Companies Act,
1956(1
of
1956),
or
any
statutory
modification
or
re-
enactmentthereof, shall have the same meanings as in or under
thoseenactments.
1Inserted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
22ibid.
3 Substituted for words "Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997" by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f.
24-03-2015.
3
CHAPTER II
DELISTING OF EQUITY SHARES
Applicability
3. (1) These regulations shall apply to delisting of equity shares of
acompany from all or any of the recognised stock exchangeswhere
such shares are listed 4[:]
5[Provided that these regulations shall not apply to securities
listed without making a public issue, on the institutional trading
platform of a recognised stock exchange.]
(2) Nothing in these regulations shall apply to any delisting
madepursuant to a scheme sanctioned by the Board for Industrialand
Financial Reconstruction under the Sick IndustrialCompanies
(Special Provisions) Act, 1985 or by the NationalCompany Law
Tribunal under section 424D of the CompaniesAct, 1956, if such
scheme –
(a) lays down any specific procedure to complete thedelisting; or
(b) provides an exit option to the existing public shareholdersat a
specified rate.
Delisting notpermissible incertaincircumstancesand conditions
for delisting
4. (1) No company shall apply for and no recognised stockexchange
shall permit delisting of equity shares of a company,-
(a) pursuant to a buyback of equity shares by the company;or
(b) pursuant to a preferential allotment made by the company;or
(c) unless a period of three years has elapsed since the listingof that
class of equity shares on any recognised stockexchange; or
4Substituted for the full stop by the SEBI (Listing of Specified Securities on Institutional Trading Platform)
Regulations, 2013, w.e.f. 08-10-2013
5Substituted by SEBI (Delisting of Equity shares) (Second Amendment) Regulations 2015, w.e.f. 14-08-2015.
Prior to its substitution, the proviso to sub-regulation (1) read as under:
“Provided that these regulations shall not apply to securities listed on the institutional trading platform of a
recognised stock exchange.”
4
(d) if any instruments issued by the company, which areconvertible
into the same class of equity shares that aresought to be delisted, are
outstanding.
6[(1A) No promoter or promoter group shall propose delisting of
equity shares of a company, if any entity belonging to the promoter or
promoter group has sold equity shares of the company during a period
of six months prior to the date of the board meeting in which the
delisting proposal was approved in terms of sub-regulation (1B) of
regulation 8.]
(2) For the removal of doubts, it is clarified that no company
shallapply for and no recognised stock exchange shall permitdelisting
of convertible securities.
(3) Nothing contained in clauses (c) and (d) of sub-regulation (1)shall
apply to a delisting of equity shares falling under clause (a) of
regulation 6.
(4) No promoter shall directly or indirectly employ the funds ofthe
company to finance an exit opportunity provided underChapter IV or
an acquisition of shares made pursuant to sub regulation(3) of
regulation 23.
(5) No 7[acquirer orpromoter or promoter group or their related
entities] shall –
(a) employ any device, scheme or artifice to defraud anyshareholder
or other person; or
(b) engage in any transaction or practice that operates as a fraud or
deceit upon any shareholder or other person; or
(c) engage in any act or practice that is fraudulent, deceptiveor
manipulative –
in connection with any delisting sought or permitted or
exitopportunity given or other acquisition of shares made underthese
regulations.
CHAPTER III
VOLUNTARY DELISTING
Delisting fromall recognised stock exchanges
6Inserted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
7 Substituted for words "promoter or other person" by the SEBI (Delisting of Equity shares) (Amendment)
Regulations 2015, w.e.f. 24-03-2015.
5
5. Subject to the provisions of these regulations, a company maydelist
its equity shares from all the recognised stock exchangeswhere they
are listed or from the only recognised stock exchange where they are
listed:Provided that all public shareholders holding equity shares of
theclass which are sought to be delisted are given an exit
opportunityin accordance with Chapter IV.
Delisting fromonly some of therecognised stock exchanges
6. A company may delist its equity shares from one or
morerecognised stock exchanges where they are listed and
continuetheir listing on one or more other recognised stock
exchanges,subject to the provisions of these regulations and subject to
thefollowing –
(a) if after the proposed delisting from any one or morerecognised
stock exchanges, the equity shares wouldremain listed on any
recognised stock exchange whichhas nationwide trading terminals, no
exit opportunityneeds to be given to the public shareholders; and,
(b) if after the proposed delisting, the equity shares wouldnot remain
listed on any recognised stock exchangehaving nationwide trading
terminals, exit opportunityshall be given to all the public shareholders
holding theequity shares sought to be delisted in accordance
withChapter IV.
Explanation: For the purposes of this regulation, ‘recognised
stockexchange
having
nationwide
trading
terminals’
means
theBombay Stock Exchange Limited, the National Stock Exchangeof
India Limited or any other recognised stock exchange whichmay be
specified by the Board in this regard.
Procedure fordelisting where noexit opportunity is required
7. (1) In a case falling under clause (a) of regulation 6 –
(a) theproposed delisting shall be approved by a resolutionof the
board of directors of the company in its meeting;
(b) the company shall give a public notice of the proposeddelisting in
at least one English national daily with widecirculation, one Hindi
national daily with widecirculation and one regional language
newspaper of theregion where the concerned recognised stock
exchangesare located;
6
(c) the company shall make an application to the concerned
recognised stock exchange for delisting its equity shares;and
(d) the fact of delisting shall be disclosed in the first annualreport of
the company prepared after the delisting.
(2) The public notice made under clause (b) of sub-regulation (1)shall
mention the names of the recognised stock exchangesfrom which the
equity shares of the company are intended tobe delisted, the reasons
for such delisting and the fact ofcontinuation of listing of equity
shares on recognised stockexchange having nationwide trading
terminals.
(3) An application for delisting made under clause (c) of sub
regulation(1) shall be disposed of by the recognised stockexchange
within a period not exceeding thirty working daysfrom the date of
receipt of such application complete in allrespects.
Conditions andprocedure fordelisting whereexit opportunity is
required
8. (1) Any company desirous of delisting its equity shares under
theprovisions of Chapter III shall, except in a case falling underclause
(a) of regulation 6, -
(a) obtain the prior approval of the board of directors ofthe company
in its meeting;
(b) obtain the prior approval of shareholders of thecompany by
special resolution passed through postalballot, after disclosure of all
material facts in theexplanatory statement sent to the shareholders
inrelation to such resolution:Provided that the special resolution shall
be acted uponif and only if the votes cast by public shareholders
infavour of the proposal amount to at least two times thenumber of
votes cast by public shareholders against it.
(c) make an application to the concerned recognised stockexchange
for in-principle approval of the proposeddelisting in the form
specified by the recognised stockexchange; and
(d) within one year of passing the special resolution, makethe final
application to the concerned recognised stockexchange in the form
specified by the recognised stockexchange:Provided that in pursuance
of special resolution asreferred to in clause (b), passed before
thecommencement of these regulations, final applicationshall be
7
made within a period of one year from thedate of passing of special
resolution or six monthsfrom the commencement of these
regulations,whichever is later.8
[(1A) Prior to granting approval under clause (a) of sub-regulation
(1), the board of directors of the company shall,-
(i) make a disclosure to the recognized stock exchanges on which the
equity shares of the company are listed that the promoters/acquirers
have proposed to delist the company;
(ii) appoint a merchant banker to carry out due-diligence and
make a disclosure to this effect to the recognized stock exchanges on
which the equity shares of the company are listed;
(iii) obtain details of trading in shares of the company for a period of
two years prior to the date of board meeting by top twenty five
shareholders as on the date of the board meeting convened to consider
the proposal for delisting, from the stock exchanges and details of
off-market transactions of such shareholders for a period of two years
and furnish the information to the merchant banker for carrying out
due-diligence;
(iv) obtain further details in terms of sub-regulation (1D) of
regulation 8 and furnish the information to the merchant banker.
(1B) The board of directors of the company while approving
the proposal for delisting shall certify that :
(i) the company is in compliance with the applicable provisions
of securities laws;
(ii) the acquirer or promoter or promoter group or their related
entities, are in compliance with sub-regulation (5) of regulation 4;
(iii) the delisting is in the interest of the shareholders.
(1C) For certification in respect of matters referred to in sub-
regulation (1B), the board of directors of the company shall take into
account the report of the merchant banker as specified in sub-
regulation (1E) of regulation 8.
(1D) The merchant banker appointed by the board of directors of the
company under clause (ii) of sub-regulation (1A) shall carry out due-
diligence upon obtaining details from the board of directors of the
company in terms of clause (iii) of sub-regulation (1A) of regulation
8
8Inserted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
8
Provided that if the merchant banker is of the opinion that details
referred to in clause (iii) of sub-regulation (1A) of regulation 8 are
not sufficient for certification in terms of sub-regulation (1E) of
regulation 8, he shall obtain additional details from the board of
directors of the company for such longer period as he may deem fit.
(1E) Upon carrying out due-diligence as specified in terms of sub-
regulation (1D) of regulation 8, the merchant banker shall submit a
report to the board of directors of the company certifying the
following:
(a) the trading carried out by the entities belonging to acquirer
or promoter or promoter group or their related entities was
in compliance or not, with the applicable provisions of the securities
laws; and(b) entities belonging to acquirer or promoter or promoter
group or their related entities have carried out or not, any transaction
to facilitate the success of the delisting offer which is not in
compliance with the provisions of sub-regulation (5) of regulation 4.]
(2) An application seeking in-principle approval for delistingunder
clause (c) of sub-regulation (1) shall be accompaniedby an audit
report as required under regulation 55A of theSecurities and
Exchange Board of India (Depositories andParticipants) Regulations,
1996 in respect of the equity sharessought to be delisted, covering a
period of six months prior tothe date of the application.
(3) An application seeking in-principle approval for delistingshall be
disposed of by the recognised stock exchange withina period not
exceeding 9[five] working days from the date ofreceipt of such
application complete in all respects.
(4) While considering an application seeking in-principleapproval for
delisting, the recognised stock exchange shallnot unfairly withhold
such application, but may require thecompany to satisfy it as to -
(a) compliance with clause (b) of sub-regulation (1);
(b) the resolution of investor grievances by the company;
(c) payment of listing fees to that recognised stockexchange;
(d) the compliance with any condition of the listingagreement with
that recognised stock exchange havinga material bearing on the
interests of its equityshareholders;
9Subsituted for word "thirty" by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f.
24-03-2015.
9
(e) any litigation or action pending against the companypertaining to
its activities in the securities market orany other matter having a
material bearing on theinterests of its equity shareholders;
(f) any other relevant matter as the recognised stockexchange may
deem fit to verify.
(5) A final application for delisting made under clause (d) of sub
regulation(1) shall be accompanied with such proof of havinggiven
the exit opportunity in accordance with the provisionsof Chapter IV,
as the recognised stock exchange may require.
CHAPTER IV
EXIT OPPORTUNITY
Applicability of Chapter IV
9. The provisions of this Chapter shall apply to any delistingsought to
be made under regulation 5 or under clause (b) ofregulation 6.
Public announcement
10. (1) The 10[acquirers or] promoters of the company shall
11[withinoneworking day fromthe date of] receipt of inprinciple
approval for delisting from the recognised stock exchange, make a
public announcement in at least oneEnglish national daily with wide
circulation, one Hindinational daily with wide circulation and one
regionallanguage
newspaper
of
the
region
where
the
concernedrecognised stock exchange is located.
(2) The public announcement shall contain all materialinformation
including the information specified in ScheduleI and shall not contain
any false or misleading statement.
(3) The public announcement shall also specify a date, being aday not
later than thirty working days from the date of thepublic
announcement, which shall be the ‘specified date’ fordetermining the
names of shareholders to whom the letter ofoffer shall be sent.
10Inserted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
11Substituted for word "upon" by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f.
24-03-2015.
10
(4) Before making the public announcement, the 12[acquirer or]
promoter shallappoint a merchant banker registered with the Board
andsuch other intermediaries as are considered necessary.
(5) It shall be the responsibility of the 13[acquirer/promoter] and
themerchant banker to ensure compliance with the provisionsof this
Chapter.
(6) No14[acquirer/promoter] shall appoint any person as a merchant
bankerunder sub-regulation (4) if such a person is an associate ofthe
15[acquirer/promoter].
16[(7)Noentitybelongingtotheacquirer,promoterandpromotergroup
ofthe
companyshallsellsharesofthecompanyduringtheperiodfrom
thedateofthe board meeting in which the delisting proposal was
approved till the completion of the delisting process.]
Escrow account
11. (1) Before making the public announcement under regulation10,
the 17[acquirer or] promoter shall open an escrow account and
deposittherein the total estimated amount of considerationcalculated
on the basis of floor price and number of equityshares outstanding
with public shareholders.
(2)
On
determination
of
final
price
and
making
of
publicannouncement under regulation 18 accepting the finalprice, the
18[acquirer or] promoter shall forthwith deposit in the escrowaccount
such additional sum as may be sufficient to makeup the entire sum
due and payable as consideration inrespect of equity shares
outstanding with publicshareholders.
(3) The escrow account shall consist of either cash deposited with a
scheduled commercial bank, or a bank guarantee infavour of the
merchant banker, or a combination of both.
(4) Where the escrow account consists of deposit with ascheduled
commercial bank, the promoter shall, whileopening the account,
empower the merchant banker toinstruct the bank to issue banker’s
12 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
13Substituted for word "promoter" by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015,
w.e.f. 24-03-2015.
14Ibid
15Ibid
16 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
17Ibid
18Ibid
11
cheques or demand draftsfor the amount lying to the credit of the
escrow account, forthe purposes mentioned in these regulations, and
the amountin such deposit, if any, remaining after full payment
ofconsideration for equity shares tendered in the offer and
those tendered under sub-regulation (1) of regulation 21shall be
released to the promoter.
(5) Where the escrow account consists of a bank guarantee,such bank
guarantee shall be valid till payments are made inrespect of all shares
tendered under sub-regulation (1) ofregulation 21.
Letter of offer
12. (1) The19[acquirer or] promoter shall despatch the letter of offer to
the publicshareholders of equity shares, not later than 20[two]working
days from the date of the public announcement 21[***].
(2) The letter of offer shall be sent to all public shareholdersholding
equity shares of the class sought to be delistedwhose names appear on
the register of the company ordepository as on the date specified in
the publicannouncement under sub-regulation (3) of regulation 10.
(3) The letter of offer shall contain all the disclosures made inthe
public announcement and such other disclosures as maybe necessary
for the shareholders to take an informeddecision.
(4) The letter of offer shall be accompanied with a biddingform for
use of public shareholders and a form to be used bythem for tendering
shares under sub-regulation (1) ofregulation 21.
Bidding period
13. (1) The date of opening of the offer shall not be later than
22[seven] working days from the date of the publicannouncement.
19Ibid
20Substituted for the words "forty five" by the SEBI (Delisting of Equity shares) (Amendment) Regulations
2015, w.e.f. 24-03-2015.
21Omitted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015. Prior to
omission it read as "so as to reach them at least five working days before the opening of the bidding period"
22Substituted for the words "fifty five" by the SEBI (Delisting of Equity shares) (Amendment) Regulations
2015, w.e.f. 24-03-2015
12
23[(1A)
Theacquirerorpromotershallfacilitatetenderingofsharesbythe
shareholders and settlement of the same, through the stock exchange
mechanism as specified by the Board.]
(2) The offer shall remain open for a 24[***] period of five working
days,during which the public shareholders may tender their bids.
Right ofshareholders toparticipate in thebook building process
14. (1) All public shareholders of the equity shares which aresought to
be delisted shall be entitled to participate in thebook building process
in the manner specified in ScheduleII.
(2) 25[An acquirer orpromoter] or a person acting in concert with any
of thepromoters shall not make a bid in the offer and the
merchantbanker shall take necessary steps to ensure compliance
withthis sub-regulation.
(3) Any holder of depository receipts issued on the basis ofunderlying
shares held by a custodian and any suchcustodian shall not be entitled
to participate in the offer.
(4) Nothing contained in sub-regulation (3) shall affect the right of
any holder of depository receipts to participate in thebook building
process under sub-regulation (1) if the holderof depository receipts
exchanges such depository receiptswith shares of the class that are
proposed to be delisted.
Offer price
15. (1) The offer price shall be determined through book building
inthe manner specified in Schedule II, after fixation of floorprice
under sub-regulation (2) and disclosure of the same inthe public
announcement and the letter of offer.
26[(2) Thefloorprice shallbe determinedin terms of regulation8 of
Securities
and
ExchangeBoardofIndia(Substantial
AcquisitionofSharesandTakeovers)
Regulations,
2011,asmay
be
applicable.]
23 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
24Omitted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.Prior to
omission it read as "minimum period of three working days and a maximum"
25Substituted for the words "A promoter" by the SEBI (Delisting of Equity shares) (Amendment) Regulations
2015, w.e.f. 24-03-2015
26 Substituted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
13
(3) 27[***]
Right of thepromoter not to accept the offer price
16. (1) The28[acquirer or] promoter shall not be bound to accept the
equity sharesat the offer price determined by the book building
process.
(2) Where the 29[acquirer or] promoter decides not to accept the offer
price sodetermined,-
(a) the 30[acquirer or] promoter shall not acquire any equity
sharestendered pursuant to the offer and the equity sharesdeposited or
pledged by a shareholder pursuant toparagraphs 7 or 9 of Schedule II
shall be returned orreleased to him within ten working days of closure
ofthe bidding period;
(b) the company shall not make the final application to theexchange
for delisting of the equity shares;
(c) the31[acquirer or] promoter may close the escrow account
openedunder regulation 11; and,
(d)32[***]
(3) 33[***]
Minimumnumber ofequity shares tobe acquired
34[17. An offer made under chapter III shall be deemed to be
successful only if,-
(a) the post offer promoter shareholding (along with the persons
acting in concert with the promoter) taken together with the shares
accepted through eligible bids at the final price determined as per
Schedule II, reaches ninety per cent. of the total issued shares of that
class excluding the shares which are held by a custodian and against
which depository receipts have been issued overseas; and
(b) at least twenty five per cent of the public shareholders holding
shares in the demat mode as on date of the board meeting referred to
27 Omitted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
28 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
29Ibid.
30Ibid.
31Ibid.
32 Omitted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-201.5
33Ibid.
34Substituted bythe SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
14
in sub-regulation (1B) of regulation 8 had participated in the Book
Building Process:
Provided that this requirement shall not be applicable to cases where
the acquirer and the merchant banker demonstrate to the stock
exchanges that they have delivered the letter of offer to all the public
shareholders either through registered post or speed post or courier or
hand delivery with proof of delivery or through email as a text or
as an attachment to email or as a notification providing
electronic link or Uniform Resource Locator including a read receipt.
Explanation.- In case the delisting offer has been made in terms of
regulation 5A of Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011, the
threshold limit of ninety per cent. for successful delisting offer shall
be calculated taking into account the post offer shareholding of the
acquirer taken together with the existing shareholding, shares to be
acquired which attracted the obligation to make an open offer and
shares accepted through eligible bids at the final price determined as
per Schedule II.]
Procedure after closure of offer
18. Within 35[five] working days of closure of the offer, the
36[promoter/acquirer]and the merchant banker shall make a public
announcement inthe same newspapers in which the public
announcement undersub-regulation (1) of regulation 10 was made
regarding:-
(i) thesuccess of the offer in terms of regulation 17 Along with the
final price accepted by the acquirer; or
(ii) the failure of the offer in terms of regulation 19; or
(iii) rejection under regulation 16 of the final pricediscovered under
Schedule II, by the promoters.
Failure of offer
35Substituted for the word "eight" by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015,
w.e.f. 24-03-2015
36Substituted for the word "promoter" by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015,
w.e.f. 24-03-2015
15
19. (1) Where the offer is rejected under regulation 16 or is
notsuccessful as per regulation 17, the offer shall be deemed tohave
failed and no equity shares shall be acquired pursuantto such offer.
(2) Where the offer fails –
(a) the equity shares deposited or pledged by ashareholder under
paragraphs 7 or 9 of Schedule IIshall be returned or released to him
within tenworking days from the end of the bidding period;
37[Providedthattheacquirershallnotberequiredtoreturnthesharesif
the
offeris made pursuant to regulation5A of Securities and Exchange
Board of India (Substantial Acquisition ofSharesand Takeovers)
Regulations, 2011.]
(b) no final application shall be made to the exchangefor delisting of
the equity shares; and
(c) the escrow account opened under regulation 11shall be closed.
Payment ofconsiderationand return of equity shares
20. (1) The promoter shall immediately on ascertaining success ofthe
offer, open a special account with a banker to an issueregistered with
the Board and transfer thereto, the entireamount due and payable as
consideration in respect ofequity shares tendered in the offer, from the
escrow account.
(2) All the shareholders whose equity shares are verified to begenuine
shall be paid the final price stated in the publicannouncement within
ten working days from the closure ofthe offer.
(3) The equity shares deposited or pledged by a shareholderpursuant
to paragraphs 7 or 9 of Schedule II shall bereturned or released to
him, within ten working days fromthe closure of the offer, in cases
where the bids pertainingthereto have not been accepted.
Right ofremainingshareholders totender equity shares
21. (1) Where, pursuant to acceptance of equity shares tendered
interms of these regulations, the equity shares are delisted,
anyremaining public shareholder holding such equity sharesmay
tender his shares to the promoter upto a period of atleast one year
from the date of delisting and, in such a case,the promoter shall accept
37 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
16
the shares tendered at the samefinal price at which the earlier
acceptance of shares wasmade.
(2) The payment of consideration for shares accepted undersub-
regulation (1) shall be made out of the balance amountlying in the
escrow account.
(3) The amount in the escrow account or the bank guaranteeshall not
be released to the promoter unless all payments aremade in respect of
shares tendered under sub-regulation (1).
CHAPTER V
COMPULSORY DELISTING
Compulsorydelisting by a stock exchange
22. (1) A recognised stock exchange may, by order, delist anyequity
shares of a company on any ground prescribed in therules made under
section 21A of the Securities Contracts(Regulation) Act, 1956 (42 of
1956):Provided that no order shall be made under this sub
regulationunless the company concerned has been given a reasonable
opportunity of being heard.
(2) The decision regarding compulsory delisting shall be takenby a
panel to be constituted by the recognised stockexchange consisting of
–(a) two directors of the recognised stock exchange (one ofwhom
shall be a public representative);
(b) one representative of the investors;
(c) one representative of the Ministry of Corporate Affairsor Registrar
of Companies; and
(d) the Executive Director or Secretary of the recognisedstock
exchange.
(3) Before making an order under sub-regulation (1), therecognised
stock exchange shall give a notice in one Englishnational daily with
wide circulation and one regionallanguage newspaper of the region
where the concernedrecognised stock exchange is located, of the
proposeddelisting, giving a time period of not less than
fifteenworking days from the notice, within which representationsmay
be made to the recognised stock exchange by anyperson who may be
aggrieved by the proposed delisting andshall also display such notice
on its trading systems andwebsite.
17
(4) The recognised stock exchange shall while passing anyorder under
sub-regulation (1), consider the representations,if any, made by the
company as also any representationsreceived in response to the notice
given under sub regulation(3) and shall comply with the criteria
specified inSchedule III.
(5) The provisions of Chapter IV shall not be applicable to
acompulsory delisting made by a recognised stock exchangeunder this
Chapter.
(6) Where the recognised stock exchange passes an order undersub-
regulation (1), it shall, -
(a) forthwith publish a notice in one English national dailywith wide
circulation and one regional languagenewspaper of the region where
the concerned recognised stock exchange is located, of the fact of
such delisting,disclosing therein the name and address of the
company,the fair value of the delisted equity shares determinedunder
sub-regulation (1) of regulation 23 and the namesand addresses of the
promoters of the company whowould be liable under sub-regulation
(3) of regulation23; and
(b) inform all other stock exchanges where the equity shares of the
company are listed, about such delisting and thesurrounding
circumstances.
Rights of publicshareholders incase of acompulsory delisting23.
(1)Where equity shares of a company are delisted by arecognised
stock exchange under this Chapter, the recognisedstock exchange
shall appoint an independent valuer orvaluers who shall determine the
fair value of the delistedequity shares.
(2)The recognised stock exchange shall form a panel of expertvaluers
from whom the valuer or valuers shall be appointedfor purposes of
sub-regulation (1).
(3)The promoter of the company shall acquire delisted equityshares
from the public shareholders by paying them the valuedetermined by
the valuer, subject to their option of retainingtheir shares.Explanation:
For the purposes of sub-regulation (1), -
(a) ‘valuer’ means a chartered accountant within the meaningof clause
(b) of section 2 of the Chartered AccountantsAct, 1949 (38 of 1949),
who has undergone peer reviewas specified by the Institute of
18
Chartered Accountants ofIndia constituted under that Act, or a
merchant bankerappointed to determine the value of the delisted
equityshares;
(b) value of the delisted equity shares shall be determined by
thevaluer having regard to the factors mentioned in regulation 15.
Consequences ofcompulsory delisting
24. Where a company has been compulsorily delisted under
thisChapter, the company, its whole time directors, its promotersand
the companies which are promoted by any of them shall notdirectly or
indirectly access the securities market or seek listingfor any equity
shares for a period of ten years from the date ofsuch delisting.
CHAPTER VI
POWERS OF THE BOARD
Power of theBoard to issue clarifications
25. In order to remove any difficulties in the application
orinterpretation of these regulations, the Board may issueclarifications
and guidelines in the form of circulars.
38[Power to relax strict enforcement of the regulations.
25A.(1)
TheBoardmayforreasonsrecordedinwriting,grantrelaxationfrom
strictenforcementofany of therequirementsof theseregulations,if the
Boardissatisfiedthattherelaxationisintheinterestsof
investorsin
securities and the securities market.
(2) For seekingexemptionunder sub-regulation (1), the promoter or
the acquirer or the company shall file anapplication with the Board,
supported
byadulyswornaffidavit,givingdetailsforseekingsuchexemptionand the
grounds
on
which
the
exemption
has
been
sought.(3)
Thepromoterortheacquirerorthecompany,asthecasemaybe,shall
38 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
19
alongwiththeapplicationreferred
toundersub-regulation(3)payanon-
refundable fee of rupees fifty thousand, by way of a banker’s cheque
or demand draft payable in Mumbai in favour of the Board.
(4) TheBoardmayafteraffordingreasonableopportunityofbeingheardto
the applicant and after considering all therelevantfacts and
circumstances,pass a reasonedorder eithergranting or rejectingthe
exemption or relaxation sought as expeditiously as possible.]
Directions by the Board
26. Without prejudice to provisions of the Act and those of
theSecurities Contracts (Regulation) Act, 1956 (42 of 1956), theBoard
may in case of any violation of these regulations and inthe interests of
the investors and the securities market give suchdirections as it deems
fit:
Provided that the Board shall, either before or after passing
suchorders, give an opportunity of hearing to the concerned person.
CHAPTER VII
SPECIAL PROVISIONS FOR SMALL COMPANIES AND
DELISTING BY
OPERATION OF LAW
Special provisionsin case of small companies
27. 39[(1) Equity shares of a company may be delisted from all the
recognisedstockexchangeswherethey
arelisted,withoutfollowingthe
procedure in Chapter IV, if,-
a) thecompanyhasapaid upcapitalnotexceedingten crorerupeesand net
worthnotexceeding
twentyfivecrorerupeesason
thelastdateof
preceding financial year;
b) 40[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 referred to in sub-
regulation (1B) of regulation 8 is less than ten per cent of the total
number of shares of such company:
39Substituted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
40Substituted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2016, w.e.f. 12-01-2016. Prior to
its substitution, clause (b) read as under:
“theequitysharesofthecompanywere not traded in any recognised stock exchangefor aperiodof
oneyearimmediately preceding the date of board meeting referred to in sub-regulation (1B) of regulation 8;
and”
20
Provided that where the share capital of a particular class of shares of
the company is not identical throughout such period, the weighted
average of the shares of such class shall represent the total number of
shares of such class of shares of the company; and]
c)the company has not been suspended by any of the recognised stock
exchangeshavingnation-widetradingterminalsforanynon-compliance
in the preceding one year; ]
(2) 41[***]
(3) A delisting of equity shares may be made under sub regulation(1)
42[***]only if, in addition tofulfilment of the requirements of
regulation 8, thefollowing conditions are fulfilled:-
(a) the promoter appoints a merchant banker anddecides an exit price
in consultation with him;
(b) 43[(b) the exit price offered to the public shareholders shall not be
less than the floor price determined in terms of sub-regulation (2) of
regulation 15 of these regulations read with clause (e) of sub-
regulation (2) of regulation 8 of the Securities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations,
2011;]
(c) the promoter writes individually to all publicshareholders in the
company informing them ofhis intention to get the equity shares
delisted,indicating the exit price together with then justification
therefore and seeking their consent forthe proposal for delisting;
(d) at least ninety per cent. of such publicshareholders give their
positive consent in writingto the proposal for delisting, and have
consentedeither to sell their equity shares at the priceoffered by the
promoter or to remain holders ofthe equity shares even if they are
delisted;
(e) the promoter completes the process of inviting thepositive consent
and finalisation of the proposalfor delisting of equity shares within
seventy fiveworking days of the first communication madeunder
clause (c);
41. Omitted by the SEBI (Delisting of Equity shares) (Amendment) Regulations, 2015, w.e.f. 24-03-2015.
42 Omitted the words "or sub-regulation (2)" by the SEBI (Delisting of Equity shares) (Amendment)
Regulations, 2015, w.e.f. 24-03-2015.
43Substituted by SEBI (Delisting of Equity shares) (Amendment) Regulations 2016, w.e.f. 12-01-2016. Prior to
its substitution, clause (b) read as under:
“the exit price offered to the public shareholders shall not be less than the price arrived at in consultation with
the merchant banker;”
21
(f) the promoter makes payment of consideration incash within fifteen
working days from the date ofexpiry of seventy five working days
stipulated inclause (e).
(4) The communication made to the public shareholders underclause
(c) of sub-regulation (3) shall contain justificationfor the offer price
with particular reference to the applicableparameters mentioned in
regulation 15 and specificallymention that consent for the proposal
would includeconsent for dispensing with the exit price discovery
throughbook building method.
(5) The concerned recognised stock exchange may delist suchequity
shares upon satisfying itself of compliance with thisregulation.
Delisting in caseof winding up,derecognition,etc
28. (1) In case of winding up proceedings of a company whoseequity
shares are listed on a recognised stock exchange, therights, if any, of
the shareholders of such company shall bein accordance with the laws
applicable to those proceedings.
(2) Where the Board withdraws recognition granted to a
stockexchange or refuses renewal of recognition to it, the Boardmay,
in the interest of investors pass appropriate order inrespect of the
status of equity shares of the companies listedon that exchange.
CHAPTER VIII
MISCELLANEOUS
Recognised stockexchanges tomonitorcompliance
29. The respective recognised stock exchanges shall comply withand
monitor compliance with the provisions of these regulationsand shall
report to the Board any instance of non-compliancewhich comes to
their notice.
Listing of delistedequity shares
30. (1) No application for listing shall be made in respect of anyequity
shares,
(a) which have been delisted under Chapter III orunder Chapter VII
(except regulation 27), for aperiod of five years from the delisting;
22
(b) which have been delisted under Chapter V, for aperiod of ten
years from the delisting.
(2) Notwithstanding anything contained in sub-regulation(1), an
application for listing of delisted equity sharesmay be made where a
recommendation in this regard hasbeen made by the Board for
Industrial and FinancialReconstruction under the Sick Industrial
Companies(Special Provisions) Act, 1985.
(3) While considering an application for listing of any equityshares
which had been delisted the recognised stockexchange shall have due
regard to facts andcircumstances under which delisting was made.
(4) An application for listing made in respect of delistedequity shares
shall be deemed to be an application forfresh listing of such equity
shares and shall be subject toprovisions of law relating to listing of
equity shares ofunlisted companies.
Transitional provisions
31. (1) Anything done or omitted to be done or any right,privilege,
obligation or liability acquired or accrued orincurred under Securities
and Exchange Board of India(Delisting of Securities) Guidelines,
2003 prior to thecommencement of these regulations shall be
governed bysaid guidelines.
44[(2)Anyproposalfordelistingmadebycompanyoranypromoteroracquir
erwho wanted to delist securities of the company, prior to
commencement
of
these
regulationsandwheretheofferpricehasnotbeendeterminedintermsofsub-
regulation(1)ofregulation15asonthedateofsuchcommencement,shallbe
proceededwithundertheSecuritiesandExchangeBoardofIndia(Delisting
of
Equity)Regulations,2009asamendedbytheSecuritiesandExchangeBoar
dof India (Delisting of Equity Shares) (Amendment) Regulations,
2015.]
(3) The remaining procedures in respect of an exitopportunity already
completed or an exit opportunityinitiated but not completed under the
Securities
andExchange
Board
of
India
(Delisting
of
Securities)Guidelines,
2003
prior
to
commencement
of
44Substituted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
23
theseregulations, shall be completed and the application fordelisting
made pursuant thereto shall be dealt under thesaid guidelines.
SCHEDULE I
[See regulation 10(2)]
CONTENTS OF THE PUBLIC ANNOUNCEMENT
1. The floor price and the offer price and how they were arrived at.
2. The dates of opening and closing of the offer.
3. The name of the exchange from which the equity shares are sought
to be delisted.
4. The manner in which the offer can be accepted by the shareholders.
5. Disclosure regarding the minimum acceptance condition for
success of the offer.
6. The names of the merchant banker and other intermediaries
together with thehelpline number for the shareholders.
7. The specified date fixed as per sub-regulation (3) of regulation 10.
8. The object of the proposed delisting.
9. The proposed time table from opening of the offer till the payment
ofconsideration or return of equity shares.
10. Details of the escrow account and the amount deposited therein.
11. Listing details and stock market data:
(a) high, low and average market prices of the equity shares of the
companyduring the preceding three years;
(b) monthly high and low prices for the six months preceding the date
of thepublic announcement; and,
(c) the volume of equity shares traded in each month during the six
monthspreceding the date of public announcement.
12. Present capital structure and shareholding pattern.
13. The likely post-delisting shareholding pattern.
14. The aggregate shareholding of the promoter together with persons
acting inconcert and of the directors of the promoter where the
promoter is a company andof persons who are in control of the
company.
15. A statement, certified to be true by the board of directors of the
company,disclosing material deviation, if any, in utilisation of
proceeds of issues ofsecurities made during the five years
24
immediately preceding the date of publicannouncement, from the
stated object of the issue.
16. A statement by the board of directors of the company confirming
that all materialinformation which is required to be disclosed under
the provisions of continuouslisting requirement have been disclosed
to the stock exchanges.
45[16A: A statement by the board of directors of the company
certifying that:-
(a) the company is in compliance with the applicable provisions of
securities laws;
(b) the acquirer or promoter or promoter group or their 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;
(c) the delisting is in the interest of the shareholders.]
17. Name of compliance officer of the company.
18. It should be signed and dated by the promoter. Where the
promoter is a company,the public announcement shall be dated and
signed on behalf of the board ofdirectors of the company by its
manager or secretary, if any, and by not less thantwo directors of the
company, one of whom shall be a managing director where there is
one.
SCHEDULE II
[See regulation 15(1)]
THE BOOK BUILDING PROCESS
1. The book building process shall be made through an electronically
linkedtransparent facility and the promoter shall enter into an
agreement with a stockexchange for the purpose.
2. The public announcement and letter of offer shall be filed without
delay withthe stock exchange mentioned in paragraph 1 and such
stock exchange shallforthwith post the same in its website.
3. The minimum number of bidding centres shall be:
(a) the four metropolitan centres situated at Mumbai, Delhi, Kolkata
andChennai;
45 Inserted by the SEBI (Delisting of Equity shares) (Amendment) Regulations 2015, w.e.f. 24-03-2015.
25
(b) such cities in the region in which the registered office of the
companyis situated, as are specified by the stock exchange mentioned
inparagraph 1.
4. There shall be at least one electronically linked computer terminal
at allbidding centres.
5. The shareholders may withdraw or revise their bids upwards not
later than oneday before the closure of the bidding period. Downward
revision of bids shallnot be permitted.
6. The promoter shall appoint ‘trading members’ at the bidding
centres, whomthe public shareholders may approach for placing bids
on the on-lineelectronic system.
7. The shareholders holding dematerialised shares desirous of availing
the exitopportunity may deposit the equity shares in respect of which
bids are made,with the special depositories account opened by the
merchant banker for thepurpose prior to placement of orders or,
alternately, may mark a pledge for thesame to the merchant banker in
favour of the said account.
8. The merchant banker shall ensure that the equity shares in the said
specialdepositories account are not transferred to the account of the
promoter unlessthe bids in respect thereof are accepted and payments
made.
9. The holders of physical equity shares may send their bidding form
togetherwith the share certificate and transfer deed to the trading
member appointedfor the purpose, who shall immediately after
entering their bids on the systemsend them to the company or the
share transfer agent for confirming theirgenuineness. The company or
the share transfer agent shall deliver thecertificates which are found to
be genuine to the merchant banker, who shallnot make it over to
promoter unless the bids in respect thereof are acceptedand payment
made. The bids in respect of the certificates which are found tobe not
genuine shall be deleted from the system.
10. The verification of physical certificates shall be completed in time
for makingthe public announcement under regulation 18.
11. The bids placed in the system shall have an audit trail which
includes stockbroker identification details, time stamp and unique
order number.
46[11A
buildin
exchan
13 of th
47[12. T
shares
the pro
to nine
shares
deposit
then,
corresp
lesser
higher
An illu
below:
Assum
shareho
delistin
46 Inserted
47 ibid.
A. Para 1
ng proce
nge mech
hese regu
The final
accepted
omoter or
ety per ce
which
toryreceip
the prom
ponding b
than the
final pric
ustration f
Bid price
(Rs.)
550
565
575
585
595
600
605
610
615
620
ming floo
olding at
ng as 15,0
by the SEBI (D
to 11 sh
ss where
hanism as
ulations.]
l offer pr
d through
r the acqu
nt. of the
are he
pts have
moter sh
bids place
final pric
ce.
for arrivin
Number of
investors
5
8
10
4
6
5
3
3
3
1
48
or price
t 75% an
00,000, th
Delisting of Eq
hall not b
e settlem
specified
ice shall
h eligible
uirer (alon
e total issu
eld by
been iss
hall accep
ed are at
ce. The p
ng at the
Demand (Num
shares)
2,5
4,0
2,0
4,0
1,2
1,3
2,1
1,4
1,5
5,0
25,0
of Rs.55
nd numbe
he final p
quity shares) (A
26
be applica
ment is
d insub-re
be determ
bids, tha
ng with th
ued share
a custo
sued. If t
pt all sh
the final
promoter
final offe
mber of
Cum
(Num
50,000
00,000
00,000
00,000
20,000
30,000
10,000
40,000
50,000
00,000
00,000
50/- per
er of sha
price wou
Amendment) R
able in re
carried o
egulation
mined as
at takes th
he person
es of that
odian an
the final
hares ten
price or
may, if h
er price is
mulative demand
mber of shares)
2,50,000
6,50,000
8,50,000
12,50,000
13,70,000
15,00,000
17,10,000
18,50,000
20,00,000
25,00,000
share, p
ares requi
uld be the
Regulations 20
espect of
out throu
n (1A) of
the price
he shareh
ns acting i
class exc
nd again
price is
ndered w
at a price
he deems
given in
0
0
0
0
0
0
Fi
0
0
0
0
promoter/
ired for
e price at
15, w.e.f. 24-0
f the boo
ugh stoc
regulatio
e at whic
holding o
in concert
cluding th
nst whic
accepted
where th
e which i
s fit, fix
the table
inal Offer Price
/ acquire
successfu
which th
3-2015.
ok
ck
on
ch
of
t)
he
ch
d,
he
is
a
e
er
ul
he
27
promoter reaches the threshold of 90%, i.e., it would be Rs.600/- per
share.]
SCHEDULE III
[See regulation 22(4)]
CRITERIA FOR COMPULSORY DELISTING
1. The recognised stock exchange shall take all reasonable steps to
trace thepromoters of a company whose equity shares are proposed to
be delisted, with aview to ensuring compliance with sub-regulation
(3) of regulation 23.
2. The recognised stock exchange shall consider the nature and extent
of the allegednon-compliance of the company and the number and
percentage of shareholderswho may be affected by such non-
compliance.
3. The recognised stock exchange shall take reasonable efforts to
verify the status ofcompliance of the company with the office of the
concerned Registrar ofCompanies.
4. The names of the companies whose equity shares are proposed to
be delisted andtheir promoters shall be displayed in a separate section
on the website of therecognised stock exchange for a brief period of
time. If delisted, the names shallbe shifted to another separate section
on the website.
5. The recognised stock exchange shall in appropriate cases file
prosecutions underrelevant provisions of the Securities Contracts
(Regulation) Act, 1956 or anyother law for the time being in force
against identifiable promoters and directorsof the company for the
alleged non-compliances.
6. The recognised stock exchange shall in appropriate cases file a
petition forwinding up the company under section 433 of the
Companies Act, 1956 (1 of1956) or make a request to the Registrar of
Companies to strike off the name ofthe company from the register
under section 560 of the said Act.
K. M. ABRAHAM
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA