Dhruv Khandelwal




circular dated May 30, 2012

♠ circular dated May 22, 2014

♠ circular dated April 17, 2015

♠ circular dated October 10, 2016

♠ circular dated January 05, 2017

♠ circular dated March 27, 2017

2. Liabilities Of Promoters And Directors In Case Of Non Compliance

3. Procedure For Providing Exit To The Shareholders By ELCs

SEBI vide circular dated May 30, 2012 issued guidelines for the exit of Derecognized/Non-operational Stock Exchanges. SEBI vide aforementioned circular also prescribed the process to be followed by the ELCs on Stock Exchanges seeking de-recognition or Stock Exchanges which have already been de-recognized by SEBI with regard to the exit option to their shareholders, by allowing the Exclusively Listed Companies to get listed on Nationwide Stock Exchanges after complying with the diluted listing norms of Nationwide Stock Exchanges, failing which they would be moved to the Dissemination Board (DB).

Further, SEBI vide circular dated May 22, 2014 provided that ELCs may also opt for voluntary delisting before the de-recognition of Stock Exchanges by following the existing delisting norms of SEBI, failing which, they shall be moved to the Dissemination Board.

Subsequently, SEBI vide circular dated April 17, 2015 allowed a period of eighteen months to ELCs to obtain listing upon compliance with the listing requirements of the nation-wide stock exchanges and those ELCs which fail to list themselves on the nationwide stock exchanges under the aforesaid mechanism shall provide exit opportunity to its members/investors.

Thereafter, SEBI vide circular dated October 10, 2016 provided a period of three months to the Exclusively Listed Companies (ELCs) on the Dissemination Board (DB) to submit an action plan to list or to provide exit to shareholders to the designated stock exchanges.

Further, SEBI vide circular dated January 05, 2017 extended the time to submit plan of action till March 31, 2017 which was again extended by SEBI vide circular dated March 27, 2017 till June 30, 2017.


Any promoter or director whose company is on the DB and has failed to demonstrate adequacy of efforts for providing exit to their shareholders in conformity with the exit mechanism as provided in this circular shall be liable for the following actions:

  • The company, its directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly associate with the securities market or seek listing for any equity shares for a period of ten years from the exit from the DB.
  • Freezing of shares of the promoters/directors.
  • List of the directors, promoters etc. of all non-compliant companies as available from the details of the company with nationwide stock exchanges shall be disseminated on SEBI website and shall also be shared with other respective agencies.
  • Attachment of bank accounts/other assets of promoters/directors of the companies so as to compensate the investors



  • The ELCs on the DB which are yet to indicate their intention to provide exit shall submit their plan of action to designated stock exchanges latest by June 30, 2017 to the satisfaction of the designated stock exchanges.
  • The designated stock exchanges shall review the plan of action and ensure completion of the process within 6 months.


  • The promoter in consultation with the designated stock exchange shall appoint an ‘independent valuer’ from the panel of expert valuers of the designated stock exchange.
  • In case the fair value determined is positive the promoter of the company shall acquire shares of such companies from the public shareholders by paying them such value determined by the valuer.
  • The promoter shall undertake to complete the entire process within seventy-five working days.
  • The promoter of the company to make a public announcement in at least one national daily with wide circulation, one regional language newspaper of the region where the exited stock exchange was located and the website of the designated stock exchanges.
  • The public announcement shall contain all material information of the fact of such exit opportunity to its shareholders, disclosing therein the name and address of company, including exit price offered by the promoter with the justification therefore, and shall not contain any false or misleading statement.
  • The announcement shall contain a declaration about the liability of the promoter to acquire the shares of the shareholders, who have not offered their shares under exit offer up to a period of one year from the completion of offer at the same price determined by the valuer.
  • The exit offer shall remain open for a period of minimum five working days during which the public shareholders shall tender their shares. The promoter shall open an escrow account in favour of independent valuer/designated stock exchange and deposit therein the total estimated amount of consideration on the basis of exit price and number of outstanding public shareholders. The escrow account shall consist of either cash deposited with a scheduled commercial bank or a bank guarantee, or a combination of both. The amount in the escrow account shall not be released to the promoter unless all the payments made in respect of shares tendered for the aforesaid period of one year.
  • The promoter shall make payment of consideration within fifteen working days from the date completion of offer.
  • The promoter shall certify to the satisfaction of designated stock exchange that appropriate procedure has been followed for providing exit to shareholders of such companies. Subsequently, the designated stock exchanges upon satisfaction shall remove the company from the dissemination board.
  • The exclusively listed companies which have 100% promoter holding shall be removed from the dissemination board on obtaining a compliance certification from any independent professional with regard to the holding of shares of these companies and submit to the designated stock exchanges.
  • The names of the companies providing exit opportunity to its shareholders and their promoters shall be displayed in a separate section on the website of the designated stock exchange.

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