Article explains Procedure For Delisting Of Shares (Infrequently Traded) under SEBI (Delisting of Equity Shares) Regulations, 2009-

S.NO. REGULATION NO. PARTICULARS
1. Regulation 8 (1) (a) of SEBI (Delisting of Equity Shares) Regulations,2009 Convene a Board Meeting –

The proposed delisting shall be approved by a resolution of the board of directors of the company in its meeting.

2. Regulation 8 (1A) of SEBI (Delisting of Equity Shares) Regulations, 2009 Outcome of Board Meeting to Stock Exchange –

The decision of the board meeting that the Board of directors has proposed to Delist the company from the exchanges be sent to the exchanges.

3. Regulation 8 (1) (b) of SEBI (Delisting of Equity Shares) Regulations,2009 Special Resolution Through Postal Ballot –

The prior approval of shareholders of the company be taken by special resolution to be passed through postal ballot, disclosing all material facts in the explanatory statement sent to the shareholders in relation to such resolution.

Imp Point:- The special resolution shall be acted upon if and only if the votes cast by public shareholders in favour of the

proposal amount to at least two times the number of votes cast by public shareholders against it.

4. Regulation 8(1)(c) of SEBI (Delisting of Equity Shares) Regulations,2009 Application for In Principal Approval to Concerned Stock Exchange –

The company makes an application to the concerned recognized stock exchange for in-principle approval of the proposed delisting in the form specified by the recognized stock exchange.

The application shall be accompanied by an audit report as required under regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 in respect of the equity shares sought to be delisted, covering a period of six months prior to the date of the application.

An application shall be disposed off by the recognised stock exchange within a period not exceeding five working days from the date of receipt of such application complete in all respects.

5 Regulation 8(1)(d) of SEBI (Delisting of Equity Shares) Regulations,2009 Final Application to Stock Exchange-

Within one year of passing the special resolution, make the final application to the concerned recognised stock exchange in the form specified by the recognised stock exchange. 

Provided that in pursuance of special resolution as referred to in clause (b), passed before the commencement of these regulations, final application shall be made within a period of one year from the date of passing of special resolution or six months from the commencement of these regulations, whichever is later.

6 Regulation 8(1A) (i) of SEBI (Delisting of Equity Shares) Regulations,2009 Disclosure to Recognised Stock Exchange-

Company Shall make a disclosure to the recognized stock exchanges on which the equity shares of the company are listed that the promoters/acquirers have proposed to delist the company

7. Regulation 8 (1A) (ii) of SEBI (Delisting of Equity Shares) Regulations,2009 Appointment of Merchant Banker – 

The promoter appoints a merchant banker registered with the Board and such other intermediaries as are considered necessary. It should not be related to the Promoter group.

The merchant banker appointed by the board of directors of the company shall carry out due diligence upon obtaining details from the board of directors of the company.

8. Regulation 8 (1B) of SEBI (Delisting of Equity Shares) Regulations,2009 The Board of Directors Shall Certify-

(i) the company is in compliance with the applicable provisions of securities laws;

(ii) the acquirer or promoter or promoter group or their related entities, are in compliance with sub-regulation (5) of regulation 4;

(iii) the delisting is in the interest of the shareholders.

9. Regulation 8 (2) of SEBI (Delisting of Equity Shares) Regulations,2009 Application for In-Principal Approval shall be accompanied by Audit Report-

An application seeking in-principle approval for delisting under clause (c) of sub-regulation (1) shall be accompanied by an audit report as required under regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 (CR Audit)  in respect of the equity shares sought to be delisted, covering a period of six months prior to the date of the application

10. Regulation 8 (3) of SEBI (Delisting of Equity Shares) Regulations,2009 In principal Approval by the Exchange –

The recognized stock exchange shall dispose off the Application of the In Principal approval complete in all respects within a period not exceeding thirty working days from the date of receipt of such application

11. Regulation 8 (5) of SEBI (Delisting of Equity Shares) Regulations,2009 Proof of Exit Opportunity- 

A final application for delisting made under clause (d) of sub regulation (1) shall be accompanied with such proof of having given the exit opportunity in accordance with the provisions of Chapter IV, as the recognised stock exchange may require.

12. Regulation 10 of SEBI (Delisting of Equity Shares) Regulations,2009 Public Announcement –

The promoters of the company upon receipt of in- principle approval for delisting from the recognized stock exchange, make a public announcement in at least one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language newspaper of the region where the concerned recognized stock exchange is located.

13. Regulation 10 (3) of SEBI (Delisting of Equity Shares) Regulations,2009 Specified Date –

A date not later than thirty working days from the date of the public announcement, to be determined on which the names of shareholders to whom the letter of offer shall be sent is determined.

 

14. Regulation11 of SEBI (Delisting of Equity Shares) Regulations,2009 Opening of Escrow account –

The promoter opens an escrow account and deposit therein the total estimated amount of consideration calculated on the basis of floor price and number of equity shares outstanding with public shareholders. The escrow account shall consist  of either cash deposited with a scheduled commercial bank, or a bank guarantee in favour of the merchant banker, or a combination of both.

Where the escrow account consists of deposit with a scheduled commercial bank, the promoter shall, while opening the account, empower the merchant banker 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 purposes mentioned in these regulations, and the amount in such deposit, if any, remaining after full payment of consideration for equity shares tendered in the offer and those tendered under sub-regulation (1) of regulation 21 shall be released to the promoter. Where the escrow account consists of a bank guarantee, such bank guarantee shall be valid till payments are made in respect of all shares tendered under sub regulation (1) of regulation 21.

15. Regulation 12 of SEBI (Delisting of Equity Shares) Regulations,2009 Letter of offer-

(1) The 19[acquirer or] promoter shall despatch the letter of offer to the public shareholders of equity shares, not later than 20[two] working days from the date of the public announcement 21[***].

(2) The letter of offer shall be sent to all public shareholders holding equity shares of the class sought to be delisted whose names appear on the register of the company or depository as on the date specified in the public announcement under sub-regulation (3) of regulation 10.

(3) The letter of offer shall contain all the disclosures made in the public announcement and such other disclosures as maybe necessary for the shareholders to take an informed decision.

(4) The letter of offer shall be accompanied with a bidding form for use of public shareholders and a form to be used by them for tendering shares under sub regulation (1) of regulation 21.

16. Regulation 13 of SEBI (Delisting of Equity Shares) Regulations,2009 Bidding period-

(1) The date of opening of the offer shall not be later than 22[seven] working days from the date of the public announcement.

[(1A) The acquirer or promoter shall facilitate tendering of shares by the shareholders and settlement of the same, through the stock exchange mechanism as specified by the Board.]

(2) The offer shall remain open for a 24[***] period of five working days, during which the public shareholders may tender their bids.

17. Regulation 15 of SEBI (Delisting of Equity Shares) Regulations,2009 Offer Price-

(1) The offer price shall be determined through book building in the manner specified in Schedule II, after fixation of floor price under sub-regulation (2) and disclosure of the same in the public announcement and the letter of offer.

(2) The floor price shall be determined in terms of regulation 8 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as may be applicable.].

18. Regulation 20 of SEBI (Delisting of Equity Shares) Regulations,2009 Payment of consideration –

The promoter shall immediately on ascertaining success of the offer, open a special account with a banker to an issue registered with the Board and transfer thereto, the entire amount due and payable as consideration in respect of equity shares tendered, from the escrow account. All the shareholders whose equity shares are verified to be genuine shall be paid the final price stated.

19. Delisting Order –

The recognized stock exchange shall dispose off the Application of the delisting complete in all respects and pass the delisting order

 

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