Mumbai: The Securities and Exchange Board of India (SEBI) said it will review delisting rules, responding to concerns from market participants that current regulations make the process of buying out minority shareholders difficult and expensive.
The proposals unveiled by the SEBI include allowing companies to offer a fixed price to buy back shares and restricting the trading of their shares after they announce plans to delist. Delistings in India are currently done through a reverse book-building process, meaning companies set a floor price, but investors can determine at which price they will tender their shares to the company.
Analysts say that effectively means that companies announcing delistings see their shares surge well above the floor price as traders look to profit, making it expensive for companies to buy out minority shareholders. SEBI asked for feedback until the end of the month, which the regulator will take into account in drafting final rules.
