De – listing of Listed company

Poll based on Previous Lecture

• Grofers, is a start – up engaged in providing the online sale of
grocery products.

• It has raised $260 million from investors including Softbank,

Nexus, General Atlantic etc.
• Before granting the funds, such venture capital firms have
ensured that it is based on technology driven platform.

• This is part of ________ process of screening.

a) Commercial viability of the proposal
b) Technical integrity of the proposal
c) Competitive advantage of the proposal
d) Legality of the proposal
 Learning Outcomes
• Appraise the situations when a public company goes for
delisting from exchange.

• Analyze the different modes of delisting of a public company.

 Delisting of AVTIL enterprises Limited

• AVTIL enterprises Limited, a company engaged in providing

the financial advisory and restructuring services.

• The company got an order from SEBI and was prohibited

from trading of shares.

• This action was taken by SEBI as the company has not

fulfilled the required obligations.

• On 23rd March 2021, the company has been characterized

as the delisted company.
 What happened to AVTIL enterprises Limited?

Listed company
removed from
stock exchange

Shares no longer
Delisting of ‘public
traded on exchange
company’
i.e. NSE, BSE

Delisting process
governed by SEBI
 Types of
Delisting

1.) 2.)
Voluntary Compulsor
Delisting y Delisting

Delisting from
Delisting one of the
from all exchanges
exchanges only

Requirements
of SEBI not
complied with
Exit No Exit
Opportunity Opportunity
 Poll – II
• GSAL (India) Limited is listed on two stock exchanges.

• The promoters of the company, by complying the SEBI de –

listing regulations has sought to de – list the company from
one stock exchange.

• It can be said that company has gone for:

a) Complete delisting
b) Partial delisting
c) Voluntary delisting
d) All of the above
 Poll based on Previous Lecture
• IDFC Mutual fund with the security code 534967 has been
delisted from the Bombay Stock Exchange on 22nd March
2021.

• Which of the following statements are true with regard to its

delisting?
a) Trading of its shares on stock exchange
b) Removal of securities of the company from stock exchange
c) Entry mechanism of investors through IPO
d) Determination of cap price by merchant banker
 Learning Outcomes
• Appraise the situations when a public company goes for
delisting from exchange.

• Analyze the reverse book building process followed in case of

delisting of a public company.
 Case Analysis
The Curious case of Saint – Gobain Sekurit India

• Saint – Gobain Sekurit India, engaged in Car

Glazing manufacturing systems.

• Announced for delisting but got poor

response from shareholders.

• Promoters not received minimum number of

equity shares from shareholders.

• Company continued to be listed on exchange

• Share price fallen from Rs. 90 to Rs. 45

 When Reverse Book Building is required?

1.)
Voluntary delisting

2.)
Cases that require to follow
Public shareholding in company
the Reverse Book building process falls below the minimum limit 

3.)
Compulsory delisting
 Reverse Book Building Process

Appointment of : 1.) Announcement by

1.) Merchant Banker
2.) Trading member for placing
bids on the online electronic
system
1.) Order placing by
Merchant Banker & promoter
shareholders
2.) Letter of offer and bidding
2.) Deposit of securities with
form to the public
trading members
shareholders

Acceptance of final price by

Placing of bids by • Final buy back price is promoter +
shareholders determined after the closure Announcement to the
(equal or above floor price) of the offer. shareholders by the merchant
bankers.
 Poll
• Essar Oil, decides to make a share buyback.
• It is of view that it can return more capital to shareholders
than through a fixed price tender.

• Which of the following is the implication of such objective of

share buyback?
a) The proposed buyback is illegal
b) The company must go for delisting offer since it has to
make the reverse book-built offer
c) Company has to provide the floor price for reverse book
building
d) Shares bought back have to be sold back through book
building
 Criteria to determine the Floor Price in
delisting

• Average of (opening & closing) 26 weeks traded

quoted price

or

• Average of preceding 2 weeks opening and closing

traded price

(from the date of announcement)

Determination of Final Delisting Price

The price at which the acquirer is able to cross

ninety percent of the share capital of the company
For example
• If total of 500 shareholders holding 10 lakhs
shares place bids at Rs. 400 per share
• If total of 5 shareholders holding 30 lakhs shares
place bids at Rs. 425 per share,

Rs. 425 would be selected as the offer price

 Case Analysis
Delisting issues of E – serve International Ltd.

• The company is engaged in providing computer

software services and went for voluntary delisting.

• It’s investment banker Citigroup fixed the floor

price at Rs. 735 per share.

• Offer price (under reverse book building process)

was pegged at Rs. 975 per share (33% over the
floor price).

• The public shareholders in this case were able to

strongly influence the pricing of the delisting.
 Case Analysis
Delisting Failure of Astra Zeneca

• The company is engaged in pharmaceutical

sector and went for voluntary delisting.

• The floor price was fixed at Rs. 825 per share.

• Offer price (under reverse book building

process) was pegged at Rs. 3000 per share

• Company rejected the offer price and

delisting failed.
 Poll based on Previous Lecture
• Wintac limited, a pharmaceutical company has gone for reverse book building
process.
• In this regard, the shareholders submitted the following bids
I. Total of 100 shareholders holding 20 lakhs worth shares place bids at Rs. 120 per
share
II. Total of 75 shareholders holding 50 lakhs worth shares place bids at Rs. 160 per
share
III. Total of 10 shareholders holding 80 lakhs worth shares place bids at Rs. 180 per
share
IV. Total of 20 shareholders holding 90 lakhs worth shares place bids at Rs. 140 per
share

• In such case, the final offer price as decided by the merchant banker on the behalf
of the company will be:
a) Rs. 120 per share
b) Rs. 140 per share
c) Rs. 160 per share
d) Rs. 180 per share
 Poll
• JSW Steel Limited, a company engaged in manufacturing sponge
iron and coils have gone for delisting of shares.
• The company has followed the reverse book building process.

• The floor price in such case will be determined on the basis of

___________
a) Average of opening & closing 26 weeks traded quoted price or
average of preceding 2 weeks opening and closing traded price.
b) Average of opening & closing 26 weeks traded quoted price or
average of preceding 3 weeks opening and closing traded price.
c) Average of opening & closing 23 weeks traded quoted price or
average of preceding 2 weeks opening and closing traded price.
d) Average of opening & closing 23 weeks traded quoted price or
average of preceding 4 weeks opening and closing traded price.
 Poll
• Zylog Systems limited has been delisted from the Bombay Stock
Exchange on 3rd March 2021.
• It was having the following structure of the shares.
• Total worth of shares = Rs. 40 crores
• Promoters holding of shares = Rs. 5 crores.

• In such case, the company must receive _______ worth of shares

from respective shareholders to complete the ‘minimum
requirement’ of shares at the time of delisting.
a) Rs. 36 crores
b) Rs. 40 crores
c) Rs. 5 crores
d) Rs. 31 crores