SEBI (Securities and Exchange Board of India), the regulator for the securities of Indian market, is all set to introduce new norms to make de-listing simpler and faster at its board meeting on November 19, 2014. In the delisting process, the shares of the delisted firm cannot be purchased or sold through exchange route.
In the new set of regulations, SEBI plans to reduce more than half of the delisting time from 137 days to 76 days.
As per Business Standard, SEBI provided an informative discussion paper suggesting to remove the prior approval of shareholders by a special resolution to decrease the delisting timeline, in-principle approval from stock exchange and also decided on doing away with the requirement of a postal ballot from shareholders. Now, only a one-time approval from shareholders and in-principle approval from stock exchanges (to be given within five days) would be required for delisting to go through.
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Presently, it takes a nearly a month for stock exchange approval for in-principle and around two months for post ballot from shareholders.
As per the stock analysts, the amendment in the delisting norms is definitely a move in the right direction as earlier long time period influenced the price discovery so decrement in delisting timeline will help promoters in not paying significant premium over the market price. The delisting norms existing at present created difficulties for companies to de-list.
SEBI will continue with the current rule, where the acquirer is required to reach 90 per cent of the total issued share capital. 25 per cent of the public shareholders will have to participate in the delisting meeting to make it successful.
While making final regulations SEBI is also asked to provide provisions to handle the insider trading. At the time of delisting of a company the shares of the company should be locked to ensure that insider trading does not occur.
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