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regular-article-logo Friday, 14 June 2024

Securities and Exchange Board of India to review delisting rules in December

The delisting rules provide an exit opportunity to all public shareholders if a company is planning to take its shares off the stock market

Our Special Correspondent Mumbai Published 17.11.23, 07:34 AM
Representational image

Representational image File image

The Securities and Exchange Board of India (Sebi) will review the delisting regulations at its next board meeting in December.

“There was a feeling that we will never review the delisting process and that we will stay with the reverse book-building process,” Madhabi Puri-Buch, chairperson of the market regulator, said at an event organised by Ficci on Thursday.

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In August, Sebi had floated a consultative paper on the subject which tossed a number of options including alternatives to the reverse book-building process which has been abused by several unscrupulous players who have cornered shares in attempt to extract a better price whenever they sensed that a company may be looking to delist its shares.

This has often led to a situation where a company has baulked at the price thrown up by the reverse bookbuilding process and chosen to stay listed.

The consultative paper had suggested alternatives that included a fixed price delisting route and counter-offer framework.

It also suggested ways to determine the floor price under the delisting rules and a review of the reference date for the determination of the floor price.

The delisting rules provide an exit opportunity to all public shareholders if a company is planning to take its shares off the stock market. Puri-Buch said the regulator had received a lot of feedback in response to the consultation paper and that had helped it draw up a proposal that it will now take to the next board meeting.

She said the regulator also intends to review insider trading rules and aspects
of the mandatory “trading plan” that key decision-making executives are required
to be submitted six months in advance setting out the number of shares and the frequency of trades that can be executed.

At present, no deviations from the trading plan is allowed and the “insider” must not execute any trade 20 days prior to the last day of a financial period.

The proposal to change insider trading rules will also be placed before the board either at the meeting in December or in January, she added.

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