5.1
A company
may delist from stock exchange where its securities are listed.
Provided that the securities of the company have been
listed for a minimum period of 3 years on any stock exchange.
Provided further that an exit opportunity has been given to
the investors for the purpose of which an exit price shall be determined in
accordance with the “book building process” described in clauses 7-10 and 13
and 14 of these guidelines.
5.2
An exit
opportunity need not be given in cases where securities continue to be listed
in a stock exchange having nation wide trading terminals.
Explanation: For the purposes of these guidelines, stock
exchange having nationwide trading terminals means the Stock Exchange, Mumbai,
the National Stock Exchange and any other stock exchange, which may be
specified by the Board.
6.
PROCEDURE
FOR VOLUNTARY DELISTING
6.1
Any
promoter or acquirer desirous of delisting securities of the company under the
provisions of these guidelines shall : -
(a)
obtain the
prior approval of shareholders of the company by a special resolution passed at
its general meeting;
(b)
make a
public announcement in the manner provided in these Guidelines.
(c)
make an
application to the delisting exchange in the form specified by the exchange,
annexing therewith a copy of the special resolution passed under sub-clause
(a); and;
(d)
comply with
such other additional conditions as may be specified by the concerned stock
exchanges from where securities are to be delisted.
7.1
Before
making application for delisting, the promoters or the acquirers of the ompany
shall make a public announcement.
7.2
The public
announcement shall contain inter-alia information specified in Schedule I.
7.3
Before
making the public announcement, the promoter shall appoint a merchant banker
registered with the Board, who is not an associate of the promoter.
8.1
Any
promoter of a company which desires to delist from the stock exchange shall
determine an exit price for delisting of securities in accordance with the book
building process described in Schedule II of these guidelines.
8.2
The offer
price shall have a floor price, which will be the average of 26 weeks traded
price quoted on the stock exchange where the shares of the company are most
frequently traded preceding 26 week from the date of the public announcement
and without any ceiling of maximum price.
8.3
In the case
of infrequently traded securities the offer price shall be as per regulation
20(5) of the SEBI (Substantial Acquisition and Takeover) Regulations, and the
infrequently traded securities shall be determined in the manner explained
under regulation 20(5) of the SEBI (Substantial Acquisition and Takeover)
Regulations.
8.4
The stock
exchange(s) shall provide the infrastructure facility for display of the price
at the terminals of the trading members to enable the investors to access the
price on the screen to bring transparency to the delisting process.
8.5
In the
event of securities being delisted, the acquirer shall allow a further period
of 6 months for any of the remaining shareholders to tender securities at the
same price;
8.6
The stock
exchanges shall monitor the possibility of price manipulation and keep under
special watch the securities for which announcement for delisting has been
made.
8.7
To
ascertain the genuineness of physical securities if tendered and to avoid the
bad delivery, Registrar and Transfer Agent shall co-operate with the Clearing
House / Clearing Corporation to determine the quality of the papers upfront.
8.8
If the
quantity eligible for acquiring securities at the final price offered does not
result in public shareholding falling below required level of public holding
for continuous listing, the company shall remain listed.
8.9
The paid up
share capital shall not be extinguished as in the case of buyback of securities;
8.10
In case of
partly paid-up securities, the price determined by the book building process
shall be applicable to the extent the call has been made and paid.
8.11
The amount
of consideration for the tendered and acceped securities shall be settled in cash;
9.1
The
promoter may not accept the securities at the offer price determined by the
book building process.
9.2
Where the
promoter decides not to accept the offer price so determined:
(a)
he shall
not make an application to the exchange for delisting of the securities; and
(b)
the
promoter shall ensure that the public shareholding is brought up to the minimum
limits specified under the listing conditions within a period of 6 months from
the date of such decision, by any of the modes specified in sub-clause 9.3.
9.3
For the
purposes of sub-clause 9.2(b), the public shareholding may be increased by any
of the following means:
(a)
by issue of
new shares by the company in compliance with the provisions of the Companies
Act, 1956 and the Securities and Exchange Board of India (Disclosure and
Investor Protection) Guidelines, 2000;
(b)
by the
promoter making an offer for sale of his holdings in compliance with the
provisions of the Companies Act, 1956 and the Securities and Exchange Board of
India (Disclosure and Investor Protection) Guidelines, 2000;
(c ) by the promoter making sale of his holdings through
the secondary market in a transparent manner;
9.4
In the
event of the promoter not being able to raise the public shareholding in
accordance with sub-clause 9.3 within six months, he shall offer for sale to
the public such portion of his holdings as would bring up the public
shareholding to the minimum limits specified in the listing agreement or the
listing conditions at the price determined by the Central Listing Authority.
10.1
On
determination of the final price pursuant to the book building, the promoter or
the acquirer shall within a period of two working days from such determination:
(a)
make a
public announcement in the newspapers of the final price as discovered by the
book building process and whether or not the promoter or the acquirer has
accepted the price; and,
(b)
communicate
to, exchange or exchanges from which delisting is sought to be made, the final
price discovered and whether the promoter has accepted the price.
11.1
When a
company which is listed on any stock exchange or stock exchanges other than the
stock exchanges having nationwide trading terminals, seeks delisting, an exit
offer shall be made to the shareholders in accordance with these guidelines.
11.2
There shall
not be any compulsion for the existing company to remain listed on any stock
exchange merely because it is a regional stock exchange.
12.1
Where the
offer for delisting results in acceptance of a fewer number of shares than the
total shares outstanding and as a consequence the public shareholding does not
fall below the minimum limit specified by the listing conditions or the listing
agreement, the offer shall be considered to have failed and no securities shall
be acquired pursuant to such offer.
13.1
The payment
of consideration for delisting of securities shall be paid in cash by the
promoter or acquirer.
14.1
A company
may delist one or all of its class of securities subject to the provisions of
this clause.
14.2
If the
equity shares of a company are delisted, the fixed income securities may
continue to remain listed on the stock exchange.
14.3
A company
which has a convertible instrument outstanding, it shall not be permitted to
delist its equity shares till the exercise of the conversion options.
15.1
The Stock
Exchanges may delist companies which have been suspended for a minimum period
of six months for non-compliance with the Listing Agreement.
15.2
The Stock
Exchanges may also delist companies as per the norms provided in
15.3 The Stock Exchange shall give adequate and wide
public notice through news papers ( including one English national daily of
wide circulation) and through display of the notice on the notice board/
website/ trading systems of the Exchange.
15.4 The stock exchange shall give a show cause
notice to a company or adopt procedure provided under Part B of Schedule III
for delisting under sub-clause
15.1 and 15.2.
15.5
The
exchange shall provide a time period of 15 days within which representation may
be made to the exchange by any person who may be aggrieved by the proposed
delisting.
115.6
The
stock exchange may, after consideration of the representations received from
aggrieved persons, delist the securities of such companies.
15.6 A Where the stock exchange delists the
securities of a company, it shall ensure that adequate and wide public notice
of the fact of delisting is given through newspapers and on the notice
boards/trading systems of the stock exchange and shall ensure disclosure in all
such notices of the fair value of such securities determined in accordance with
the Explanation to clause 16.1
15.7
The stock
exchange shall display the name of such company on its website.
16.1
Where the
securities of the company are delisted by an exchange, the promoter of the
company shall be liable to compensate the security-holders of the company by
1
Substituted by
amendment vide circular dated January 31, 2006. The earlier clause read as -
15.6 The stock exchange shall ensure that adequate
and wide public notice is given through newspapers and on the notice
boards/trading systems of the stock exchanges after the period of show cause is
over.
paying them the fair value of the securities
held by them and acquiring their securities, subject to their option to remain
security-holders with the company.
^Explanation: For the purposes of this
sub-clause, fair value of securities shall be determined by persons appointed
by the stock exchange out of a panel of experts, which shall also be selected
by the stock exchange, having regard to the factors mentioned in regulation 20
of the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997
316.2
-
deleted
17.1
In case of
rights issue, allotment to the promoters or the persons in control of the
management shall be allowed even if they subscribe to unsubscribed portion
which may result in public shareholding falling below the permissible minimum
level.
Provided that the adequate disclosures have been
made in the offer document to that effect.
Provided further that they agree to buy out the
remaining holders at the price of rights issue or make an offer for sale to
bring the public shareholding at the level specified in the listing conditions
or listing agreement to remain listed.
17.2
In case the
rights issue is not fully subscribed, which may result in the public
shareholding falling below the permissible minimum level as specified in the
listing condition or listing agreement, the promoter(s) of the company shall be
required to delist by providing an exit opportunity in the manner specified in
clause 17.1 of these guidelines or may be required to make offer for sale of
their holdings so that the public shareholding is raised to the minimum level
specified in the listing agreement or in the listing conditions within a period
of 3 months.
2
Substituted by amendment vide circular dated January 31,
2006. The earlier clause read as - Explanation:
For the purposes of this sub-clause fair value shall be determined by the
arbitrator having regard to the factors mentioned in Regulation 20 of the
Securities and Exchange Board of India (Substantial Acquisition of shares and
Takeovers) Regulations, 1997 .
Deleted by
amendment vide circular dated January 31, 2006. The deleted clause read as -
16.2 The security holders may enforce their claim to
compensation/fair value under this clause through the arbitration mechanism of
the exchange in the manner laid down in its byelaws.
18.1
Reinstatement
of delisted securities should be permitted by the stock exchanges with a
cooling period of 2 years. In other words, relisting of securities should be
allowed only after 2 years of delisting of the securities. It would be based on
the respective norms/criteria for listing at the time of making the application
for listing and the application will be initially scrutinized by the Central
Listing Authority.
SCHEDULE I
[See Guideline
7.2]
CONTENTS
OF THE PUBLIC ANNOUNCEMENT
1.
The floor
price and how it was reached
2.
The dates
of opening and closing of the bidding
3.
The name of
the exchange or exchanges from which the securities are sought to be delisted.
4.
The names
and addresses of the trading members as well as the bidding terminals and
centres through which bids can be placed.
5.
Description
of the methodology to be adopted for determination of acceptable price
6.
Period for
which the offer shall be valid
7.
The
necessity and the object of the delisting
8.
A full and
complete disclosure of all material facts.
9.
The
proposed time table from opening of the offer till the settlement of the
transfers.
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 securities of the company during the preceding
three years;
(b)
monthly
high and low prices for the six months preceding the date of the public
announcement; and,
(c)
the volume
of securities traded in each month during the six months preceding the date of
public announcement.
12.
Present
capital structure and shareholding pattern.
13.
The likely
post-delisting capital structure.
14.
The
aggregate shareholding of the promoter group and of the directors of the
promoters, where the promoter is a company and of persons who are in control of
the company.
15.
Name of compliance
officer of the company.
16.
It should
be signed and dated by the promoter.
SCHEDULE II
[See Guideline
8.1]
THE BOOK
BUILDING PROCESS
1. The book building process shall be made through
an electronically linked transparent facility.
2. The number of bidding centres shall not be less
than thirty, including all stock exchange centres and there shall be at least
one electronically linked computer terminal at all bidding centres.
3. The promoter shall deposit in an escrow account,
100 per cent of the estimated amount of consideration calculated on the basis
of the floor price indicated and the number of securities required to be
acquired. The provisions of clause 10 of the Securities and Exchange Board of
India (Buyback of Securities) Regulations, 1998 shall be applicable mutatis
mutandis to such escrow account.
4. The offer to buy shall remain open to the
security holders for a minimum period of three days. The security holders shall
have a right to revise their bids before the closing of the bidding.
5. The promoter or acquirer shall appoint ‘trading
members’ for placing bids on the online electronic system.
6. Investors may approach trading members for
placing offers on the on-line electronic system. The format of the offer form
and the details that it must contain shall be specified.
7. The security holders desirous of availing the
exit opportunity shall deposit the shares offered with the trading members
prior to placement of orders. Alternately they may mark a pledge for the same
to the trading member. The trading members in turn may place these securities
as margin with the exchanges/clearing corporations.
8. The offers placed in the system shall have an
audit trail in the form of confirmations which gives broker ID details with
time stamp and unique order number
9.
The final
offer price shall be determined as the price at which the maximum number of
shares has been offered. The acquirer shall have the choice to accept the
price. If the price is accepted then the acquirer shall be required to accept
all offers upto and including the final price but may not have to accept higher
priced offers, subject to clause 15. An illustration is given below:
|
Offer Quantity
|
Offer Price
|
Remarks
|
|
50
|
120
|
Floor price
|
|
82
|
125
|
|
|
108
|
130
|
Final price (as qty offered is max)
|
|
27
|
135
|
|
|
5
|
140
|
|
10 If final price is accepted the acquirer shall
have to accept offers up to and including the final price i.e. 240 shares at
the final price of Rs. 130/-.
11 At the end of the book build period the merchant
banker to the book building exercise shall announce in the press and to the
concerned exchanges the final price and the acceptance (or not) of the price by
the acquirer.
12 The acquirer shall make the requisite funds
available with the exchange/clearing corporation on the final settlement day
(which shall be three days from the end of the book build period). The trading
members shall correspondingly make the shares available. On the settlement day
the funds and securities shall be paid out in a process akin to secondary
market settlements.
13 The entire exercise shall only be available for
demat shares. For holders of physical certificates the acquirer shall keep the
offer open for a period of 15 days from the final settlement day for the
shareholders to lodge the certificates with custodian(s) specified by the
merchant banker.
SCHEDULE III (GUIDELINE 17.1]
NORMS AND PROCEDURE FOR DELISTING OF SECURITIES
BY THE STOCK EXCHANGES
A NORMS
1. The percentage of equity capital (floating
stock) in the hands of public investors.
This may be seen with reference to ---
•
Existing
paid-up equity capital
•
Market lot
•
. Share
price - very high, medium, low
•
, Market
Capitalisation
•
. SEBIs
Takeover Regulations-Regulation 21(3)
• . Clause 40A of the Listing Agreement
2. The minimum trading level of shares of a company
on the exchanges. There should be some liquidity in every trading cycle. There
should be some volume of trading for price discovery on the market. The Company
should appoint market makers. Criteria of no-trading may be considered.
3. Financial aspect/Business aspects
a) The company should generate reasonable
revenue/income/profits. It should be operational/working. It must demonstrate
earning power through its financial results, profits, reserves, dividend payout
for last 2/3 years.
b) If there is hardly any public interest in the
securities the company then it is for consideration whether its “listed
company” label needs to be retained any more.
c) The company should have some tangible asset. It
is for consideration as to what value of assets the company should own in order
to be listed continuously listed.
4. Track records of compliance of the Listing
Agreement requirements for the past three years.
■ Submission of audited/unaudited results, annual
report, other documents required to be furnished to the Exchange,
■ Book closure Record date with due notice
■ Payment of listing fee
■ Service to investors especially with regard to
timely return of shares duly transferred, timely payment of dividend,
communication of price sensitive information, etc.
■ Failure to observe good accounting practises in
reporting earnings and financial position
■ Publishing half yearly unaudited/audited results
■ . Frequent changes in - Accounting year, Share
transfer agent,
Registered office, Name.
5. Promoters’ Directors’ track record especially
with regard to insider trading, manipulation of share prices, unfair market
practises (e.g. returning of share transfer documents under objection on
frivolous grounds with a view to creating scarcity of floating stock, in the
market causing unjust aberrations in the share prices, auctions, close-out,
etc. (Depending upon the trading position of directors or the firms).
6. If whereabouts of the company, its promoters
directors are not available and even the letters sent by the Exchange return
undelivered and the company fails top remain in touch with the Exchange.
7. The company has become sick and unable to meet
current debt obligations or to adequately finance operations, or has not paid
interest on debentures for the last 2- 3 years, or has become defunct,or there
are no employees, or liquidator appointed, etc.
8. On the basis of the above norms and other
relevant information available about the company, its promoters/directors,
project, litigations, etc., a profile of the company should be prepared and
then a decision on delisting should be taken by an Exchange.
1. The decision on delisting should be taken by a
panel to be constituted by the Exchange comprising the following :
a.
Two
directors/officers of the Exchange (one director to be a public representative)
b.
One representative
of the investors
c.
One
representative from the Central Government (Department of Company Affairs)/
Regional Director / Registrar of Companies
d.
Executive
Director / Secretary of the Exchange
2. Due notice of delisting and intimation to the
company as well as other Stock Exchanges where the company’s securities are
listed to be given.
3.
Notice of
termination of the Listing Agreement to be given.
4.
An appeal
against the order of compulsory delisting may be made to the SEBI.
