ASSIGNMENT

ON
FINANCIAL MARKET ANALYSIS

DELISTING OF SECURITIES

SUBMITTED BY:
SUBMITTED TO:
ABHISHEK DUTTA (07)
Dr. RANJIT SINGH
AMITAB PAUL (77)
ASSISTANT PROFESSOR
PRITHWIRAJ DAS (08)
MBA (AUS)
SURAJJT NATH (25)
MBA (AUS)
 History
 In the earlier days, the public issues of shares and their pricing was looked
after by the Controller of Capital Issues (CCI).

1992, the same is being looked after by Securities and Exchange Board of
India (SEBI).

The purpose of establishing SEBI and the SEBI Act, 1992 was to protect the
interests of the investors in securities and to promote the development of, and to
regulate, the securities market
 Meaning

• LISTING = STOCK EXCHANGES + COMPANY

• DELISTING = STOCK EXCHANGES -COMPANY

 Delisting

Compulsor
Voluntary
y
Compulsory delisting Process
flowchart
Constitution of panel by recognized stock
exchange to take decision regarding the
delisting .

Public notice in one English and one regional

language newspaper.

representation by the any person who may be

aggrieved by the proposed delisting.

Delisting order by the recognized stock exchange.

public notice and information to all stock exchanges where the
shares of the company are listed and also on its trading system
and websites

Appointment of independent valuer

Determination of fair value of shares

Acquisition of shares by the promoters at determined

fair value

company/promoters/PAC/Directors can neither access

securities nor seek listing for a period of 10 years
 Voluntary delisting process flow chart
Convene Board meeting to approve delisting & to appoint Merchant Banker &
other intermediaries & send the outcome of the Board meeting to the Stock
Exchange.

Pass special resolution through Postal Ballot.

File application to the concerned Stock Exchange(s) for taking approval

for Delisting along with the audit report.

Received approval from the concerned

exchange

Calculation of Floor price.

Open Escrow account & deposit the amount equal to the consideration to be payable
to the outstanding Public Shareholders equity shares determined on the basis of Floor
price calculated above.

Public announcement by the Promoters in atleast one English National

Daily, one Hindi National Daily with wide circulation & one regional
language newspaper of the region where the concerned recognized Stock
Exchange is located.

Determine the list of Shareholders to whom the letter

of offer is to be sent.

Dispatch the letter of offer to the public along with the bidding
form & the form of tendering the shares in the Reverse Book
Building Process.

Opening of Offer.
 Date of Closing of Offer

Minimum Bids received. Minimum Bids not received

Failure to offer

Public announcement in the newspaper for acceptance/rejection or failure

of offer.

Promoter accepted Promoter accepted the

the final price final price
 Shall return the tendered
Deposit additional amount to the escrow
shares to the shareholders
account & shall simultaneously open special
within 10 working days
account in which all consideration deposited
from closing of offer.
in the Escrow account shall be transferred.

Payment to the shareholders who have

tendered their shares in the bidding process

Final application to the stock exchange

Delisting order by the stock exchange

Remaining shareholders can tender their shares over a period of

one year at the same price to the promoter.

Release of Escrow Account

Comparison between Old & New
Regulations
 Particulars
Securities And Exchange
Board of India (Delisting of
Securities) Guidelines, 2003
Coverage All kind of Securities are
covered
Definitions-Exchange There is a concept of the
Delisting Exchange and
Exchange
Definitions-Public The Public shareholding is the
Shareholding shareholding in a company of
the persons other than the
Promoters, Persons Acting in
concert with the Promoter
Securities And Exchange Board
of India (Delisting Of Equity
Shares) Regulations, 2009.
Only Equity Shares are
Covered
Both the earlier definitions
merged and a definition of
Recognized Stock exchange is
inserted
The public shareholding is the
shareholding in a company of
the persons other than the
Promoters, Persons Acting in
concert with the Promoter ,
holders of Depositors receipts
and the custodian thereof .
 Securities And Exchange Securities And Exchange
Particulars Board of India (Delisting Of
Board of India (Delisting
of Securities) Guidelines, Equity Shares) Regulations,
2009.
2003

Definitions-Working Days Working Days are not Working days are defined
defined as the working days of the
SEBI.
Applicability Widely defined Not widely defined.
Inapplicability Not mentioned exclusively Separate section is made. The
and separately. exemption is available to the
companies which have been
declared sick & their
reconstruction scheme provides
the delisting including the
provisions of the exit option to
the shareholders.
 Securities And Exchange Board
Particulars of India (Delisting of Securities)
Guidelines, 2003
Voluntary delisting The procedure and provisions of
both kind of Delisting a) Without
Exit option and b) With exit option
merged and no separate sections
were there.
Specified Date No concept of specified date, on
which the list of eligible public
shareholders can be determined to
whom the Letter of Offer will be
sent for Delisting.
Bidding period Only minimum time mentioned
during which the bidding Period
remain open which is 3 days
Securities And Exchange
Board of India (Delisting Of
Equity Shares) Regulations,
2009.
The procedures for both kind of
Delisting a) Without Exit option
and b) With exit option are
defined and provided in an
identifiable manner.
The concept of Specified date
introduced, which is 30 days from
the date of the Public
Announcement, on which the
shareholders list be freezed to
whom the letter of offer will be sent
for the Delisting.
The bidding period will now be
3 days to 5 days and should
start within 55th day of the
public announcement.
 Particulars
Right of remaining shareholders
Small Companies
Reinstatement of securities
Securities And Exchange
Board of India (Delisting of
Securities) Guidelines, 2003
The shareholders who could not participate
in the Delisting offer can offer their shares
to the promoters during a period of 6
months after the Delisting.
No special provisions are there for the
small companies. They have to follow
the same provisions as the Large and
big companies have to.
The companies cannot be relisted at
the exchange for a period of 2 years
from the period of delisting.
Securities And Exchange
Board of India (Delisting
Of Equity Shares)
Regulations, 2009.
The shareholders who could not
participate in the Delisting offer can
offer their shares to the promoters
during a period of 1 year after the
Delisting.
Special provisions under the
separate section be given for the
small companies and winding up
companies. They need not to
follow the Reverse Book Building
process.
The companies delisted voluntarily
cannot be relisted for a period 5 years
and the companies compulsorily
delisted cannot be relisted for a period
of 10 years from the date of delisting
Comparison between Voluntary and
Compulsory Delisting

Criteria Compulsory Delisting
Initiative Action Any Recognized Stock
Exchange makes an order to
delist the equity shares of a
company.
Grounds Delisting order can be made on the
non-fulfillment of the listing
regulations of the respective
exchange and on any other ground
prescribed in the rules made under
section 21A of SCRA, 1956.
Public Notice Public Notice in this case be given
by the Exchange
Voluntary Delisting from all
the Exchange(s)
Any Company can voluntarily
apply to the concerned stock
exchange(s) for delisting.
The Company either for cost
benefit, or to comply with any of
the rules and regulations etc may
seek delisting from any of the
exchange.
Public notice and all
announcements be given by the
Promoters of the company.
 Criteria
Compulsory Delisting
Approvals The Panel of Experts has to
take the decision after giving a
reasonable opportunity of
being heard to all the persons
who may be aggrieved by the
Delisting of the company.
General Meeting of the No need of the General
shareholders meeting of the shareholders
Appointment of Merchant The complete process is
Banker monitored by the Panel of
Experts
Voluntary Delisting from
all the Exchange(s)
The Company seeking
voluntary delisting shall take
the approval of the concerned
stock exchange(s) and also of
public shareholders.
Shareholders resolution to be
passed through Postal ballot.
The complete process is
monitored by the Merchant
Bankers
 Criteria Compulsory Delisting Voluntary Delisting from all
the Exchange(s)

Exit Price To be calculated by the The price to be determined on

Independent value at which the the basis of the past trading data
Promoter should take the shares or book values of the company
from the Public shareholders. by the promoters in consultation
by the Merchant Banker

Reverse Book Building process No bids are invited from the Complete process of Reverse Book
Shareholders for determination of Building is to be completed for
the Final Price determination of the Final Price.

Debarred from the securities The company/ The company can not relist its
market Promoters/Directors are securities for a period of 5
debarred from the securities years.
market for a period of 10 years
 ILLUSTRATIONS

ATLAS COPCO (INDIA) LTD.

VOLUNTARY DELISTING
 Company Profile
• The Company is a public limited company incorporated
under the Indian Companies Act, 1956, having its registered
office at Sveanagar, Mumbai Pune Road, Dapodi, Pune-
411012, India.

• The Equity Shares are listed on the Bombay Stock

Exchange Limited (“BSE”) and Pune StockExchange
(“PSE”).

• Atlas India is a company promoted by the Promoter. The

Promoter of the Company was holding 18,899,360 Equity
Shares on date 18-feb-2011 representing 83.77% of the paid
 CONVENE BOARD MEETING
• On October 28, 2010, the Promoter informed the Company
of its intention to make the Delisting Offer and requested
the board of directors of the Company to convene a meeting
to consider the Delisting Offer and to communicate and
recommend the said proposal for approval by the
shareholders in accordance with the delisting Regulations.
SPECIAL RESOLUTION THROUGH
POSTAL BALLOT
• The board of directors of the Company vide its
resolution dated October 29, 2010, approved the
proposal received from the Promoter to initiate the
Delisting Offer in accordance with the provisions of the
Delisting Regulations, subject to applicable law and to
seek approval of the shareholders of the Company.
• A special resolution has been passed by the
shareholders of the Company through postal ballot, the
result of which was declared on December 24, 2010,
approving the proposed delisting of the Equity Shares
from the BSE and PSE in accordance with the Delisting
Regulations.
 In-principal Approval By Stock
Exachange
• The votes cast by Public Shareholders in favour of
the Delisting offer were more than two times the
number of votes cast by the Public Shareholders
against it. The BSE has issued its in-principle
approval to the Delisting Offer vide letter dated
January 25, 2011, subject to compliance with the
Delisting Regulations.
 Receipt of In-principal Approval
• The BSE has issued its in-principle approval
to the Delisting Offer vide letter dated
January 25, 2011, subject to compliance with
the Delisting Regulations.
 Calculation Of Floor Price
• The floor price for the Equity Shares was
determined by the Promoter in consultation with
Manager to the Offer to be ` 1426/- (Rupees One
Thousand Four Hundred Twenty Six Only) per
equity share.
• The Floor Price was arrived at as per the Valuation
Report dated 18th November, 2010 of M/s. SSPA &
Co., the Chartered Accountants .
 ESCROW ACCOUNT
• In accordance with the Delisting Regulations, the Promoter,
Citibank NA (the “Escrow Bank”) and the Manager to the
Offer have entered into an escrow agreement dated
February 7, 2011 subsequent to which the Promoter has
opened an escrow account with the Escrow Bank at their
branch at D.N. Road, Fort, Mumbai-400.001.
• The Escrow Bank has issued, pursuant to bank guarantee
letter dated February 17, 2011 in favour of the Merchant
Banker for an aggregate amount of `550,00,00,000/- (Five
hundred and Fifty Crores Rupees only).
 PUBLIC ANNOUNCEMENT
• The Public Announcement has been issued in the
following newspapers as required under Regulation
10(1) of the Delisting Regulations:
NEWSPAPER LANGUAGE EDITIONS

Business Standard English & Hindi ALL

Loksatta Marathi Pune

 CONTD..
• An public announcement consists of following –

 The floor price and the offer price and how they were
arrived at.
 The dates of opening and closing of the offer.
 The name of the exchange from which the equity shares are
sought to be delisted.
 The manner in which the offer can be accepted by the
shareholders.
 PROPOSED TIMETABLE FOR
THE OFFER
ACTIVITY DATE
Date of publication of the PA February 18, 2011
Specified Date for determining the names of shareholders to February 18, 2011
whom the Offer Letters shall be sent
Dispatch of Offer Letters/Bid Forms to Public Shareholders as February 22, 2011
on
Specified Date
Bid Opening Date (10.00 am) March 7, 2011
Bid Closing Date (3.00 pm) March 11, 2011
Announcement of Discovered Price/Exit Price and the March 23, 2011
Promoter’s
Acceptance/Non-acceptance of Discovered Price/Exit Price
Return of Equity Shares to shareholders in case of failure of March 25, 2011
Delisting Offer/Bids have not been accepted
ACCEPTANCE OF FINAL PRICE
• If promoter accept the final price then he
will deposit the additional amount in the
escrow account and will simultaneously
open a special account which shall be used
for payment to the Public Shareholders who
have tendered Equity Shares in the Delisting
Offer
FINAL STEPS
Payment to the shareholders who
have tendered there shares in the
bidding process

Final application to stock exchange

Delisting order by stock exchange

 O U
K Y
A N
T H