SEBI to let companies to delist via fixed price mechanism - CNBC TV18 (2024)

Capital markets regulator, the Securities and Exchange Board of India (Sebi), on Thursday, June 27, allowed companies to delist via a fixed price mechanism rather than the existing reverse book-building process to ensure ease of doing business for listed entities.

At present, the process for a company to delist from stock exchanges involves a reverse book-building process. Here, shareholders of the company submit offers to sell their securities back to the promoters or major shareholders.

Under the new mechanism, the fixed price will be set at a 15% premium over the floor price. The move will simplify the delisting process for companies while ensuring fair value discovery for shareholders.

The regulator has reduced the threshold for a counter offer to 75% from the previous 90%, provided that at least 50% of the public shareholding has been tendered.

In terms of ensuring fair pricing, SEBI has mandated that the counter offer made by the acquirer must not fall below either the Volume Weighted Average Price (VWAP) of shares during the RBB process or the indicative price offered by the acquirer.

Furthermore, the SEBI emphasised that a delisting offer would only be deemed successful if the post-offer aggregate shareholding of the acquirer reaches 90% of the total issued shares.