Partner with Economic Laws Practice, Advocates & Solicitors. Views of the
author are personal.
has with effect from 24 March 2015 amended the following regulations:
(Delisting of Equity Shares) Regulations, 2009 (“Delisting Regulations”);
Takeovers) Regulations, 2011 (“Takeover Regulations”); and
are the highlights of the amendments to the Delisting Regulations:
promoter or promoter group cannot propose delisting of equity shares of a
company, if any entity belonging to the promoter or promoter group has sold
equity shares of the company during a period of six months prior to the date of
the board meeting in which the delisting proposal was approved in terms of
to granting its approval to delisting, the board of directors is obliged to:
exchanges that the promoters/acquirers have proposed to delist the company;
due-diligence and make a disclosure to this effect to the recognized stock
company for a period of two years prior to the date of board meeting by top
twenty five shareholders as on the date of the board meeting convened to
consider the proposal for delisting, from the stock exchanges and details of
off-market transactions of such shareholders for a period of two years, and
furnish the information to the merchant banker for carrying out due-diligence.
board of directors of the company while approving the proposal for delisting
has to certify the following after taking into account the due diligence report
of the merchant banker:
provisions of securities laws;
their related entities, are in compliance with Regulation 4(5) which broadly
deals with them adopting any fraudulent or unfair or manipulative practice;
merchant banker appointed by the board of directors of the company is obliged
to carry out due-diligence upon obtaining details from the board of directors
of the company. The merchant banker can also call for additional details from
the board of directors of the company for such longer period as may be deemed
report of the merchant banker should contain following details:
belonging to acquirer or promoter or promoter group or their related entities
was in compliance or not, with the applicable provisions of the securities
promoter group or their related entities have carried out or not, any
transaction to facilitate the success of the delisting offer which is not in
compliance with the provisions of Regulation 4(5).
stock exchange is now required to issue the in-principle approval for delisting
within five working days, as against thirty working days.
public announcement should now be made within a period of one working day of
the receipt of in-principle from stock exchange.
entity belonging to the acquirer, promoter and promoter group of the company
can sell shares of the company during the period from the date of the board
meeting in which the delisting proposal was approved till the completion of the
letter of offer should be dispatched to the shareholders within two working
days of the date of the public announcement, as against forty five working
bidding period should now open within seven working days from the date of the
of shares in a delisting offer and settlement will now have to be facilitated
through the stock exchange mechanism.
bidding period should remain open for a period of five working days.
floor price for delisting will have to be now determined in terms of regulation
8 of the Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011.
delisting offer shall now be considered successful only if following conditions
the persons acting in concert with the promoter) taken together with the shares
accepted through eligible bids at the final price determined as per Schedule
II, reaches ninety per cent of the total issued shares of that class excluding
the shares which are held by a custodian and against which depository receipts
have been issued overseas; and
shareholders holding shares in the demat mode as on date of the board meeting
referred to in Regulation 8(1B) had participated in the Book Building Process.
not be applicable to cases where the acquirer and the merchant banker
demonstrate to the stock exchanges that they have delivered the letter of offer
to all the public shareholders either through registered post or speed post or
courier or hand delivery with proof of delivery or through email as a text or
as an attachment to email or as a notification providing electronic link or
Uniform Resource Locator including a read receipt.
of regulation 5A of the Takeover Regulations, the threshold limit of ninety per
cent for successful delisting offer will have to be calculated taking into
account the post offer shareholding of the acquirer taken together with the
existing shareholding, shares to be acquired which attracted the obligation to
make an open offer and shares accepted through eligible bids at the final price
determined as per Schedule II of the Delisting Regulations.
the Delisting Regulations, the term “promoter” has been replaced with the term
post-offer public announcement now needs to be issued within five working days
of the closure of the offer, as against eight working days.
has now been conferred with powers to relax strict enforcement of the Delisting
Regulations, subject to certain conditions.
pre-requisites for delisting a “small company” have been modified.
disclosure requirements in schedule I (contents of the public announcement) have
also been amended to reflect the aforesaid amendments to the Delisting
regards schedule II, para 1 to 11 shall not be applicable in respect of book
building process where settlement is carried out through stock exchange
notification amending the Delisting Regulations is available at – https://indiacorplaw.in/wp-content/uploads/2015/03/1427261684807.pdf
are the amendments to the Takeover Regulations:
to the acquirer declaring his intention upfront to delist the target company at
the time of making the detailed public statement, the target company can be
delisted in accordance with the Delisting Regulations (“Delisting Offer”).
case of failure to delist the target company, the acquirer will have to make an
announcement within two working days in respect of such failure and will have
to comply with all applicable provisions of the Takeover Regulations. The
acquirer will have to accordingly file the draft letter of offer with SEBI
within five working days of the announcement.
shareholders who have tendered shares in the Delisting Offer will be entitled
to withdraw such shares tendered, within 10 working days from the date of the
announcement of failure to delist.
offer price shall stand enhanced by an amount equal to a sum determined at the
rate of 10% per annum for the period between the scheduled date of payment of
consideration to the shareholders and the actual date of payment of
consideration to the shareholders. “Scheduled date” means the date on which the
payment of consideration ought to have been made to the shareholders in terms
of the timelines in the Takeover Regulations.
of the target company is not permitted where a competing offer has been made.
acquirer will have to facilitate tendering of shares in an open offer by the
shareholders and settlement of the same, through the stock exchange mechanism.
case of a Delisting Offer, the completion of the acquisition of shares which
triggered an open offer can be completed by the acquirer only after making the
public announcement regarding the success of the delisting proposal.
amending the Takeover Regulations is available at – https://indiacorplaw.in/wp-content/uploads/2015/03/1427261613075.pdf
is the amendment to the Buy-Back Regulations:
acquirer or promoter will have to facilitate tendering of shares by the
shareholders and settlement of the same, through the stock exchange mechanism.
amending the Buy-Back Regulations is available at – https://indiacorplaw.in/wp-content/uploads/2015/03/1427261741142.pdf