SEBI (Delisting of Equity Shares)

Regulations, 2009 (as amended 2018)

GROUP-7:
1)AMAN KUMAR KHOSLA - 20P007
2)DHANANJAI - 20P017
3)ONKAR VIJAYAKUMAR - 20P027
4)KERFEGAR DALAL - 20P030
5)SACHIN HEDA - 20P047
6)SHUBHAM KUMAR - 20P057
 INTRODUCTION TO SHARE DELISTING
● Removal of a listed stock from a stock exchange platform
● No longer be traded in stock market.
● In simple words, delisting means the removal of a stock from stock
exchange.
● Can be either voluntary or involuntary.
● Need to acquire 90% percent of stock to be delisted from stock
exchange
 WHAT IS COVERED IN ACT AND TYPES OF DELISTING

WHAT COME ● The SEBI ( Delisting of Equity shares ) Regulations, 2009

UNDER THE (amended 2018) are applicable to delisting of equity shares of
ACT a company from all or any of the stock exchanges where such
shares are listed.

TYPES OF ● Voluntary Delisting : Delisting of equity shares of the

DELISTING company voluntarily on the application of the company
● Compulsory Delisting: Delisting of equity shares of the
company by the stock exchange of the company
 VOLUNTARY DELISTING

TYPES: FROM ALL STOCK EXCHANGES

● A company may delist its equity shares from all the stock exchanges, provided
an exit opportunity is given to the public shareholders.

FROM ONE OR MORE STOCK EXCHANGES

● A company may delist its equity shares from one or more Recognized stock
exchange and continue listing in other RSE.
● If the shares are delisted from one or more RSE but continues to stay listed in a
RSE having nationwide trading terminal, EXIT OPPORTUNITY need NOT be
given.
● If the shares are delisted from one or more RSE but continues to stay listed in a
RSE not having nationwide trading terminal, EXIT OPPORTUNITY NEEDS to be
given
 Conditions and Procedure– Voluntary Delisting

No Exit ● A board resolution needs to be passed.

Opportunity to ● A public notice shall be published in two news papers. ( mentioning the SE
be given if from where the shares are delisted, reason for delisting & fact of continuation
of listing on other RSE)
● An application to be given to the concerned recognized stock exchange.
( The application shall be disposed off by the SE within 30 working days ).
● The fact of delisting to be disclosed in the first annual report after delisting.
 Conditions and Procedure – Voluntary Delisting Contd.

Exit ● Obtain prior approval of the board.

opportunity to ● Obtain prior approval of the shareholders by a special resolution passed
be given through postal ballot.
● The number of votes cast by public shareholders in favour of the
resolution should be at least two times the votes cast against.
● Application to the concerned recognized stock exchange for in-principle
approval. (Audit report as required under regulation 55 A of SEBI
(Depositories and participants ) regulations, 1996 covering a period of 6
months prior to delisting )
● Make a final application to the concerned RSE within one year of passing
of special resolution. ( A proof that an exit opportunity had been given
needs to be given )
● Application to be disposed off by the RSE within 30 working days.
 COMPULSORY DELISTING
Compulsory ● The stock exchange, by order, may delist the equity shares of a company.
Delisting ● The decision of delisting shall be taken by a panel to be constituted by the
RSE
● Before Passing an order, the RSE shall give a notice in at least two news
papers, giving a time of 15 working days within which representations may
be made by any person aggrieved by the proposed delisting
● Before passing of order, The company shall be given a reasonable
opportunity of being heard
● The RSE shall consider the representations made before passing the order.
● Provisions relating to EXIT OPPORTUNITY are not applicable
● After passing an order, the RSE shall give a notice in two newspapers
stating the fact of delisting, name and address of the company, fair value of
the equity delisted etc
 Rights of Public shareholders & consequences.

Rights of The Recognised Stock Exchange shall appoint an independent fair valuer (s) to
Public determine the value of the equity delisted.
shareholders
The promoters shall acquire the shares from the public at the fair value
determined by the valuer.
This point is very crucial to protect the right of minority stakeholders and India
has ranked 13th in protecting minority shareholder’s right of ‘Ease of Doing
Business Report’ of 2020 by World Bank.

Consequences The whole time directors, promoters and the companies promoted by them shall
not directly or indirectly access the securities market or seek listing for a period
of 10 years.
RELISTING OF STOCKS

COOLING ● Voluntary delisting - 5 years

PERIOD ● Compulsory delisting - 10 years

Relisting of ● No cooling period

sick ● Relisted through the restructuring scheme passed by (The
companies Board for Industrial and Financial Reconstruction) BIFR
2018 AMENDMENTS & REASONS

● Inclusion of a provision for the acquirer / promoter to make a counter offer if the price
discovered under the reverse book building process (RBB) is not acceptable to them
Clarification as to the reference date for computing the floor price
Three month timeline from date of delisting is given to promoter to buyback shares from
shareholders

REASONS:
● Arbitrage Seekers and Shareholder Groups
Prevent promoters from selling to complicit friends
Fixation on floor price
Not considering Book value
Case Examples
RICOH INDIA DELISTING FAILURE IN 2012,2014

● Delisting failed because acquirer rejected the discovered price

Floor price - 174/share
For 225/share, the company would have received 69.4 lakh shares
The company did not want to pay the amount and delisting failed
In 2012 the delisting failed because the discovered price of 53.79/ share
attracted very less bids from shareholders
The stock is still trading in NSE

Ref:
1)https://www.sptulsian.com/f/whats-buzzing/ricoh-india-sinks-as-delisting-fails
2)https://www.livemint.com/Money/lnpduLLthg5ac5WOTXxmHO/Ricoh-India-down-20-as-delisting-fails.html
DIC INDIA DELISTING FAILURE IN 2014

● Delisting failed because not enough shareholders showed interest in floor

price
Floor price - 174/share, indicative price - 260/share
For 260/share, the company received 14.56 lakh bids whereas the required
amount was 16.75 lakh (90% threshold)
The company could not get enough share responses to go private
Stock slumped post the failed delisting
The stock is still trading in NSE

Ref:
1)
https://www.thehindubusinessline.com/markets/stock-markets/dic-india-stock-plunges-on-failed-delisting-offer/article23153879.ece#:~:te
xt=The%20stock%20of%20DIC%20India,a%20share%20to%20its%20shareholders
.
2)http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=877173&classic=true
LINDE DELISTING RUNS INTO PROBLEMS

● Linde AG’s parent praxair (part of BOC group) wanted to delist the shares
from the market in 2018 November
The floor price set by Linde was 425 rupees per share
Discovered price which is the price expected by shareholders was around
2025 per share
The company could not buy or make a counter offer
It could not buy the 90% shares from market
The stock is still trading in NSE

Ref: 1)https://economictimes.indiatimes.com/markets/stocks/news/linde-indias-delisting-plan-faces-a-jolt/articleshow/67597460.cms
2)
https://economictimes.indiatimes.com/markets/stocks/news/linde-india-gains-on-talk-of-delisting-by-parent/articleshow/72286292.cms?fr
om=mdr
HEXAWARE SUCCESSFUL DELISTING

● Hexaware had it’s delisting process on September 9th -15th

The floor price set was 264.97rupees per share, indicative price was 285
rupees
Discovered price which is the price expected by shareholders was expected
to be around 450-480 per share
The company’s promoters accepted the final bid amount of 475 per share
It could buy the 91.16% shares from market
It is gonna buy 87.28 million shares

Ref: 1)https://economictimes.indiatimes.com/markets/stocks/news/after-hexawares-successful-delisting-now-all-eyes-are-on-
vedanta/articleshow/78276115.cms
2)https://www.livemint.com/market/stock-market-news/hexaware-tech-hits-record-high-as-promoters-accept-delisting-price-
11600849302501.html
VEDANTA DELISTING CURRENTLY IN NEWS

● Vedanta has been raising expectations of delisting it’s stock. It has already
delisted from london stock exchange
The stock price has been low for a considerable amount of time
The book value of the stock was 146.87 rupees, the company is trying to
take advantage of situation by reducing book value to 87 rupees
This is seen as a move to indicate shareholders that the company stock is not
attractive
The move has drawn a lot of criticism
Analysts feel the discovery price will be much higher
Ref: 1)https://www.scconline.com/blog/post/2020/06/19/delisting-vedanta-from-stock-exchange-might-be-less-cozier-than-it-seems/
2)
https://economictimes.indiatimes.com/markets/stocks/news/linde-india-gains-on-talk-of-delisting-by-parent/articleshow/72286292.cms?fr
om=mdr
LANCO Infratech forced Delisting by SEBI

● Lanco infratech had huge overheads and company was paying that through
its earning. therefore it can produce competitive production which reduced
the cash flow and pushed the company towards bankruptcy. Once the
bankruptcy was inevitable, it got compulsory delisted from NSE in 17th
Oct, 2019
The company was under a loss of 900 crores
The company had to pay interest of Rupees 1032 crore
Honrable National Company Law Tribunal, Hyderabad Bench Dated August
7 2017, has initiated Corporate Insolvency Resolution Process (CIRP) in the
company under Section 7 of insolvency and bankruptcy code (2016) IBC
Ref:
1) http://www.lancogroup.com/pdf/financials/Q3_2017-18.pdf
Thank you!