SEBI eases Delisting Norms, Introduces Concept of Counter Offer by Acquirers / Promoters

SEBI, via its amendment dated November 14, 2018 (“Amendment Regulations”) amended the SEBI (Delisting of Equity Shares) Regulations, 2009 (“Regulations”). The major changes brought by the Amendment Regulations are as follows:

  • A definition of ‘acquirer’ has been added in the Regulations and it has been added that any reference made to the ‘promoter’ under the Regulations shall apply mutatis mutandis to an ‘acquirer’ making a delisting offer;
  • The definition of ‘public shareholders’ has been amended in order to exclude promoter group and acquirers from its ambit;
  • Subsequent to the Amendment Regulations, the company, delisting its shares, needs to satisfy the stock exchange that it has complied with all the condition of SEBI (Listing   Obligations and Disclosure Requirements) Regulations, 2015;
  • The date for determining the names of shareholders to whom the letter of offer shall be sent, shall not be later than one (1) working day from the date of the public announcement of delisting. As per the earlier provisions, such date could have been extended to thirty (30) working days from the date of the public announcement;
  • The Amendment Regulations have introduced the concept of 'counter offer' wherein, if the acquirer / promoter is not satisfied with the price of the securities in relation to which the exit option is provided, discovered under the reverse book building process, then such acquirer / promoter may make a counter offer to the public shareholders within two (2) working days and which shall not be less than the book value of the company as certified by the merchant banker; and
  • A clarification has now been included in the Amendment Regulations that the reference date for computing the ‘floor price’ would be the date on which the recognised stock exchange(s) were required to be notified of the board meeting in which the delisting proposal would be considered.