TMI BlogSecurities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021X X X X Extracts X X X X X X X X Extracts X X X X ..... all bear the meaning assigned to them below and their cognate expressions and variations shall be construed accordingly,- a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992); b) acquirer includes a person - (i) who decides to make an offer for delisting of equity shares of the company along with the persons acting in concert in accordance with regulation 5A of the Takeover Regulations as amended from time to time ; or (ii) who is the promoter or part of the promoter group along with the persons acting in concert. c) Board means the Securities and Exchange Board of India established under section 3 of the Act ; d) bidding period means the period within which shareholders may tender their shares in acceptance of the offer for delisting of equity shares of the company made under these regulations; e) control shall have the same meaning as assigned to it under the Takeover Regulations as amended from time to time; f) company means a company within the meaning of sub-section (20) of section 2 of the Companies Act, 2013 (18 of 2013) and includes a body corporate or corporation established under any enactment for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; s) Peer Review Company Secretary means a Company Secretary in practice, who is either practicing individually or as a sole proprietor or as a partner of a Peer Reviewed Practice Unit , holding a valid certificate of peer review issued by the Institute of Company Secretaries of India; t) public shareholding shall have the same meaning as assigned to it under rule 2(e) of the Securities Contracts (Regulation) Rules, 1957 as amended from time to time and public shareholders shall be construed accordingly; u) persons acting in concert shall have the same meaning as assigned to it under the Takeover Regulations as amended from time to time; v) promoter shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time; w) promoter group shall have the same meaning as assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time; x) recognised stock exchange means any stock exchange that has been granted recognition under section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting public shareholders shall be provided the exit opportunity at a price which shall not be less than the price, by whatever name called, at which a promoter or any entity belonging to the promoter group or any other shareholder, directly or indirectly, is provided an exit opportunity: Provided further that the details of delisting of such shares along with the justification for the exit price in respect of the proposed delisting shall be disclosed to the recognized stock exchange(s) where the shares are listed within one day of approval of the resolution plan under section 31 of the Insolvency Code. Conditions for delisting 4 . (1) Neither any company shall apply for nor any recognised stock exchange shall permit delisting of equity shares of a company:- (a) unless a period of three years has elapsed since the listing of that class of equity shares on any recognized stock exchange; (b) if any instrument issued by the company, which is convertible into the same class of equity share(s) that is sought to be delisted, is outstanding; (c) pursuant to a buyback of equity shares by the company, including a buyback pursuant to consolidation or division of all or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange that has nationwide trading terminals. Procedure for delisting where no exit opportunity is required 6 . (1) Any company desirous of delisting its equity shares under the provisions of regulation 5 of these regulations shall - (a) obtain the prior approval of its Board of Directors; (b) make an application to the relevant recognised stock exchange(s) for delisting its equity shares; (c) issue a public notice of the proposed delisting from the relevant stock exchange(s) in at least one English national newspaper with wide circulation, one Hindi national newspaper with wide circulation in their all India editions and one vernacular newspaper of the region where the relevant stock exchange(s) is located; (d) disclose the fact of delisting in its first annual report post delisting. (2) The public notice issued under clause (c) of sub-regulation (1) shall mention the name(s) of the recognised stock exchange(s) from which the equity shares of the company are intended to be delisted, the reasons for such delisting and the fact of continuation of listing of equity shares on the recognised stock exchange(s) having nationwide trading terminals. (3) An appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company, not later than twenty one days from the date of the initial public announcement. (2) The Board of Directors of the company, before considering the proposal of delisting, shall appoint a Peer Review Company Secretary and provide the following information to such Company Secretary for carrying out duediligence:- (a) the details of buying, selling and dealing in the equity shares of the company by the acquirer or its related entities during the period of two years prior to the date of board meeting held to consider the proposal for delisting, including the details of the top twenty five shareholders, for the said period; (b) the details of off-market transactions of all the shareholders mentioned in clause (a) for a period of two years; (c) any additional information, including the information mentioned in clauses (a) and (b) for a longer period of time, sought by the Company Secretary if the Company Secretary is of the opinion that the information provided under clauses (a) and (b) is not sufficient for providing the certification in terms of sub-regulation (3). (3) After obtaining the information from the Board of Directors of the company under sub-reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke an application to the relevant recognised stock exchange for in-principle approval of the proposed delisting of its equity shares in the Form specified by the recognised stock exchange from time to time, not later than fifteen working days from the date of passing of the special resolution or receipt of any other statutory or regulatory approval, whichever is later. (2) The application seeking in-principle approval for the delisting of equity shares shall be accompanied by an audit report as required under regulation 76 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 in respect of the equity shares sought to be delisted, covering a period of six months prior to the date of the application. (3) Such application seeking in-principle approval for the delisting of the equity shares shall be disposed of by the recognised stock exchange within a period not exceeding, fifteen working days from the date of receipt of such application that is complete in all respects. (4) The recognised stock exchange shall not unfairly withhold such an application, but may require the company to satisfy or inform it as regards - (a) compliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scovered price, the acquirer shall forthwith deposit in the escrow account such additional sum as may be sufficient to make up the entire sum due and payable as consideration in respect of equity shares outstanding with the public shareholders. (5) The escrow account shall consist of either the cash deposited with a Scheduled Commercial Bank or a bank guarantee in favour of the Manager to the offer or a combination of both. (6) Where the escrow account consists of a deposit with a Scheduled Commercial Bank, the acquirer shall, while opening the account, authorize the Manager to the offer to make fund transfers through electronic mode or such other mode permitted by the Reserve Bank of India, and to instruct the bank to issue banker s cheques or demand drafts for the amount lying to the credit of the escrow account, for the purpose(s) mentioned in these regulations, and the amount in such account, if any, remaining after full payment of consideration for the equity shares tendered in the delisting offer and those tendered under sub-regulation (1) of regulation 26 of these regulations shall be released to the acquirer. (7) Where the escrow account consists of a bank guarante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose names appear on the register of the company or depository as on the date specified in the detailed public announcement. (3) A copy of the letter of offer shall also be made available on the websites of the company and the Manager to the offer for the benefit of the public shareholders. (4) The letter of offer shall contain all the disclosures made in the detailed public announcement and such other disclosures as may be necessary for the shareholders to take an informed decision. (5) The public shareholders shall have the right to inspect all the documents as referred in the letter of offer and the Manager to the offer shall facilitate the inspection. (6) The letter of offer shall be accompanied with a Form for the use of public shareholders for the purpose of either creating a lien or tendering the physical shares, as the case may be. (7) An eligible public shareholder may participate in the offer for the delisting of equity shares and make bids even without receiving the Form or letter of offer and such shareholder may tender shares in the manner specified by the Board in this regard. Bidding mechanism 17 . (1) The bidding period shall start not later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be determined in terms of regulation 8 of Takeover Regulations as may be applicable. (3) The reference date for computing the floor price would be the date on which the recognized stock exchange(s) was required to be notified of the board meeting in which the delisting proposal was considered and approved. (4) The acquirer shall have the option to provide an indicative price in respect of the delisting offer, which shall be higher than the floor price calculated in terms of sub-regulation (2). (5) The acquirer shall also have the option to revise the indicative price upwards before the start of the bidding period and the same shall be duly disclosed to the shareholders. (6) The acquirer may, if it deems fit, pay a price higher than the discovered price determined in terms of sub-regulation (1). Minimum number of equity shares to be acquired 21 . An offer made under Chapter III of these regulations or a counter offer made by the acquirer in terms of sub-regulation (4) of regulation 22 of these regulations, as the case may be, shall be deemed to be successful if,- (a) the post offer shareholding of the acquirer, along with the shares tendered / offered by pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s than the book value of the company as certified by the Manager to the offer. Explanation, - For the purpose of sub-regulation (5), the book value shall be computed on the basis of both consolidated and standalone financial statements of the company as per the latest quarterly financial results filed by the company on the recognized stock exchange(s) as on the date of public announcement for counter offer, and the higher of the values so computed shall be treated as the book value. Failure of the offer 23. (1) The delisting offer shall be considered to have failed under the following circumstances:- (a) the minimum number of shares are not tendered / offered as provided under clause (a) of regulation 21 of these regulations. Explanation,- If a counter offer has been made by the acquirer in terms of sub-regulation (4) of regulation 22 of these regulations, the failure of the said counter offer shall be considered in accordance with clause (a); or (b) the price discovered through the reverse book building process is rejected by the acquirer. (2) In case of failure of the delisting offer, (a) the equity shares tendered / offered in terms of Schedule II or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the public announcement in the following manner - (i) In case the discovered price is equal to the floor price or the indicative price as provided under regulation 20, or in case the acquirer is bound to accept the equity shares in the delisting offer in terms of sub-regulation (2) of regulation 22 of these regulations, the payment shall be made through the secondary market settlement mechanism; (ii) In case the discovered price or the price, if any, offered by the acquirer in terms of sub-regulation (6) of regulation 20 of these regulations, is higher than the floor price or the indicative price, as the case may be, the payment shall be made within five working days from the date of the public announcement under sub-regulation (4) of regulation 17 of these regulations. (2) The acquirer shall be liable to pay interest at the rate of ten percent per annum to all the shareholders, whose bids have been accepted in the delisting offer, if the price payable in terms of sub-regulation (1) is not paid to all the shareholders within the time specified thereunder: Provided that in case the delay was not attributable to any act or omission of the acquirer or was caused du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall: (a) publish, on a quarterly basis, an advertisement in the same newspapers in which the detailed public announcement of the offer for delisting of equity shares was published, inviting the remaining public shareholders to avail the exit opportunity during the one year exit window after delisting of shares; (b) send follow up communications to the remaining public shareholders on a quarterly basis; and (c) file a quarterly progress report to the stock exchange(s), which shall be disseminated to the public thereafter by the stock exchange(s), disclosing the following: (i) number of remaining public shareholders at the beginning and end of the quarter; and (ii) details of public shareholders who availed the exit opportunity during the quarter. (2) The stock exchange(s) shall monitor the compliance of sub-regulation (1). Obligations of the company 28. (1) Upon receipt of the detailed public announcement, the Board of Directors of the company shall constitute a Committee of independent directors to provide reasoned recommendations on the delisting offer. (2) The Committee of independent directors shall provide its written reasoned recommendations o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic announcement of the offer for the delisting of equity shares under these regulations, the acquirer shall ensure that firm financial arrangements have been made for fulfilling the payment obligations under the delisting offer and that the acquirer is able to implement the delisting offer, subject to any statutory approvals for the delisting offer that may be necessary. (2) The acquirer shall ensure that the contents of the initial public announcement, the detailed public announcement, the letter of offer and announcement about success or failure of the offer for delisting are true, fair and adequate in all material aspects, not misleading and based on reliable sources that shall be mentioned wherever necessary. (3) The acquirer and the persons acting in concert with it shall be jointly and severally responsible for the fulfilment of the applicable obligations under these regulations. (4) The acquirer shall ensure to acquire the shares offered by the remaining public shareholders at the same price at which the equity shares had been delisted for a minimum period of one year. (5) No acquirer or persons acting in concert with it shall sell shares of the company during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations. (5) Where the recognised stock exchange passes an order under sub-regulation (1), it shall, - (a) forthwith publish a notice in one English national newspaper with wide circulation, one Hindi national newspaper with wide circulation in their all India editions and one vernacular newspaper of the region where the relevant 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 determined under sub-regulation (1) of regulation 33 of these regulations and the names and addresses of the promoters of the company who would be liable under sub-regulation (4) of regulation 33 of these regulations; (b) inform all other stock exchanges where the equity shares of the company are listed, about such delisting; and (c) upload a copy of the said order on its website. (6) The provisions of Chapter IV of these regulations shall not be applicable to a compulsory delisting made by a recognised stock exchange under this Chapter. Rights of public shareholders in case of compulsory delisting 33 . (1) Where the equity shares of a company are delisted by a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulation (4) of regulation 33 of these regulations, as certified by the relevant recognized stock exchange; (b) the promoters, whole-time directors and person(s) responsible for ensuring compliance with the securities laws, of the compulsorily delisted company shall also not be eligible to become directors of any listed company till the exit option as mentioned in clause (a) is provided. (3) The stock exchange(s) shall monitor the compliance of the provisions of this Chapter and take appropriate action for non-compliance thereof in accordance with the provisions of these regulations. CHAPTER VI Part - A SPECIAL PROVISIONS FOR SMALL COMPANIES Delisting of equity shares of small companies 35 . (1) Equity shares of a company may be delisted from all the recognised stock exchanges where they are listed, without following the procedure in Chapter IV of these regulations, if,- (a) the company has a paid up capital not exceeding ten crore rupees and net worth not exceeding twenty five crore rupees as on the last date of preceding financial year; (b) the number of equity shares of the company traded on each such recognised stock exchange during the twel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulation 20 of these regulations and specifically mention that consent for the proposal would include consent for dispensing with the exit price discovery through reverse book building method. (4) The acquirer shall be liable to pay interest at the rate of ten percent per annum to all the shareholders, whose bids have been accepted in the delisting offer, if the price payable in terms of sub-regulation (2) is not paid to all the shareholders within the time specified thereunder: Provided that in case the delay was not attributable to any act or omission of the acquirer or was caused due to the circumstances beyond the control of the acquirer, the Board may grant waiver from the payment of such interest. (5) The relevant recognised stock exchange may delist such equity shares upon satisfying itself of compliance with this regulation. Part - B SPECIAL PROVISIONS FOR COMPANIES LISTED ON INNOVATORS GROWTH PLATFORM Delisting of equity shares of companies listed on innovators growth platform after making an initial public offer 36 . (1) The provisions of these regulations, shall mutatis mutandis apply to delisting of equity shares of a company listed on innov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the delisting subsidiary company; b) upon such delisting becoming effective, the subsidiary company shall become a wholly owned subsidiary of the listed holding company; c) compliance with regulations 11, 37 and 94 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Circulars issued thereunder; d) e-voting from shareholders of both listed companies wherein votes cast by public shareholders of the listed subsidiary in favour of the proposal are at least two times the number of votes cast against it and the votes cast by the public shareholders of the listed holding company in favour of the proposal are more than the number of votes cast by the public shareholders against it; e) the shares of the listed holding company and the subsidiary company are listed for at least 3 years and shall not be suspended at the time of taking this route; f) the subsidiary company has been a listed subsidiary of the listed holding company for the past three years; g) no adverse orders have been passed by the Board in the past 3 years against the listed holding company and the listed subsidiary company; h) no f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of a company: (a) whose equity shares have been delisted pursuant to a resolution plan under section 31 of the Insolvency Code; (b) whose equity shares are listed and traded on the innovators growth platform pursuant to an initial public offer and which is delisted from the said platform; (c) whose equity shares have been delisted in terms of regulation 35 of these regulations. (3) While considering an application for listing of equity shares of a company which had been delisted earlier, the recognised stock exchange shall give due regard to the facts and circumstances under which such equity shares were delisted. (4) An application for listing made in respect of delisted equity shares shall be deemed to be an application for fresh listing of such equity shares and shall be subject to provisions of law relating to listing of equity shares of unlisted companies: Provided that the company shall make appropriate disclosures in the offer document about the reasons for seeking listing after delisting. CHAPTER VIII Power of the Board to issue clarifications 41 . In order to remove any difficulties in the application or interpretation of these regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interests of the investors and the securities market issue such directions as it deems fit. Repeal and Savings 44 . (1) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, stand repealed from the date on which these regulations come into force. (2) Notwithstanding such repeal,- (a) anything done or any action taken or purported to have been done or taken including in-principle approval given by the recognised stock exchanges, relaxation or exemption granted by the Board, fee collected, any adjudication, enquiry or investigation commenced or show cause notice issued under the repealed regulations, prior to such repeal, shall be deemed to have been done or taken under the corresponding provisions of these regulations; (b) the previous operation of the repealed regulations or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the repealed regulations, any penalty, forfeiture or punishment incurred in respect of any contravention or offence committed against the repealed regulations, or any investigation, proceeding or remedy in respect of any such right, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectors of the acquirer where the acquirer is a company and of persons who are in control of the company. 16. 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 of securities made during the five years immediately preceding the date of detailed public announcement, from the stated objects of the issues. 17. A statement by the Board of Directors of the company confirming that all material information which is required to be disclosed under the provisions of continuous listing requirement have been disclosed to the stock exchanges. 18. List of documents copies of which shall be available for inspection by the public shareholders at the registered office of the Manager to the offer during the working days. 19. 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 its 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes which are found to be non-genuine shall be deleted from the system. 10. The verification of physical certificates for making the public announcement under regulation 17 of these regulations shall be completed on the day on which they are received by the share transfer agent. 11. The bids placed in the system shall have an audit trail which includes stock broker identification details, time stamp and unique order number. 12. Clauses 1 to 11 shall not be applicable in respect of the book building process where settlement is carried out through stock exchange mechanism as specified in sub-regulation (2) of regulation 17 of these regulations. 13. The discovered price shall be determined as the price at which shares are accepted through eligible bids, that takes the shareholding of the acquirer (along with the persons acting in concert) to ninety per cent of the total issued shares of that class excluding the shares which are held by following: (i) a custodian(s) holding shares against which depository receipts have been issued overseas; (ii) a trust set up for implementing an Employee Benefit scheme under the Securities and Exchange Board of India (Share Based Emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The recognised stock exchange shall take into account the grounds prescribed in the rules made under the Securities Contracts (Regulation) Act, 1956 (42 of 1956) while compulsorily delisting the equity shares of the company. 2. The recognised stock exchange shall take all reasonable steps to trace the promoters of a company whose equity shares are proposed to be delisted, with a view to ensuring compliance with sub-regulation (4) of regulation 33. 3. The recognised stock exchange shall consider the nature and extent of the alleged non-compliance by the company and the number and percentage of public shareholders who may be affected by such non-compliance. 4. The recognised stock exchange shall take reasonable efforts to verify the status of compliance with the provisions of the Companies Act, 2013 (18 of 2013) and the rules and regulations made thereunder, by the company with the office of the concerned Registrar of Companies. 5. The names of the companies whose equity shares are proposed to be delisted and their promoters shall be displayed in a separate section on the website of the recognised stock exchange. If delisted, the names shall be shifted to another sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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