Sebi makes delisting easy for small firms

The board of Sebi, which met here in Mumbai also decided to come up with a consultative paper to provide an exit opportunity to dissenting shareholders in case of change in the objectives or varying the term of contracts refer-red to in the prospectus.

However, to protect the interest of investors, Sebi said that the determination of the exit price would be governed by the rules applicable for not frequently traded shares under the Delisting Regulations and Sebi Takeover Regulations.

“Delisting regulations provide for simplified procedure of delisting for small companies and exempt them from the requirements of Chapter IV of the Delisting Regul-ations, subject to certain conditions. Currently, one of such conditions is that the shares of the company have not been traded for the preceding one year,” Sebi said.

However, based on suggestions received from various investor associations, the regulator has approved the proposal that the condition of no trading for preceding one year may be relaxed and the small companies, whose trading of equity shares during 12 calendar months is less than 10 per cent of the total number of shares of such company, would also be eligible for simplified procedure of delisting.

Additionally, the mandatory business responsibility reporting requirement for top 100 listed entities based on their market capitalisation has now been extended top 500 companies. The key developments, which are required to be reported by these entities in their annual reports include the areas such as environment, social, governance, and stakeholders relationship among others.

The regulator has also decided to provide general exemption from open offer obligations arising due to passive increase in voting rights as a result of expiry of call notice period and forfeiture of shares.

The regulator said that individuals or entities willing to subscribe to the shares offered by stock exchanges should first satisfy the ‘fit and proper’ person criteria specified by Sebi. “Towards ensuring compliance that every shareholder be Fit & Proper, each applicant shall be required to make declaration to this effect at the time of making application during IPO or OFS,” the regulator said.

To avoid conflict of interest, Sebi added that the shareholdings of trading members, associates or agents should not exceed 49 per cent in any circumstances. Towards maintaining of 51 per cent share ownership by investors under the ‘public category’, the market regulator has asked stock exchanges to put in a mechanism ensure compliance with the shareholding norms.