SEBI floats Consultation Paper proposing framework for Voluntary Delisting of PSUs

The Securities and Exchange Board of India (SEBI) has released a Consultation Paper on “S𝘦𝘱𝘢𝘳𝘢𝘵𝘦 𝘤𝘢𝘳𝘷𝘦 𝘰𝘶𝘵 𝘧𝘰𝘳 𝘷𝘰𝘭𝘶𝘯𝘵𝘢𝘳𝘺 𝘥𝘦𝘭𝘪𝘴𝘵𝘪𝘯𝘨 𝘰𝘧 𝘱𝘶𝘣𝘭𝘪𝘤 𝘴𝘦𝘤𝘵𝘰𝘳 𝘶𝘯𝘥𝘦𝘳𝘵𝘢𝘬𝘪𝘯𝘨𝘴” to seek opinions on the possible ways to carry out voluntary delisting under SEBI (Delisting of Equity Shares) Regulations, 2021 of PSUs where promoter shareholding equals or exceeds 90%.

𝐊𝐞𝐲 𝐏𝐫𝐨𝐩𝐨𝐬𝐚𝐥𝐬:

1. 𝐄𝐥𝐢𝐠𝐢𝐛𝐢𝐥𝐢𝐭𝐲: Only those PSUs, whose aggregate shareholding of promoter / promoter group along with the other PSUs equals or exceeds 90% of the total issued shares of the Company, may be eligible for delisting through this separate carve out mechanism.

2. 𝐃𝐢𝐬𝐩𝐞𝐧𝐬𝐢𝐧𝐠 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭 𝐨𝐟 𝐜𝐨𝐦𝐩𝐥𝐲𝐢𝐧𝐠 𝐰𝐢𝐭𝐡 𝐌𝐏𝐒 𝐍𝐨𝐫𝐦𝐬: Eligible PSUs may be delisted without the requirement of complying with Minimum Public Shareholding (MPS) norms.

3. Eligible PSUs may be delisted through a fixed price delisting process, irrespective of whether the shares being traded frequently or not. However, as prescribed, the fixed delisting price shall be at least 15% premium over the floor price.

4. 𝐑𝐞𝐥𝐚𝐱𝐢𝐧𝐠 𝐭𝐡𝐞 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭 𝐨𝐟 𝐬𝐞𝐞𝐤𝐢𝐧𝐠 𝐭𝐰𝐨-𝐭𝐡𝐢𝐫𝐝 𝐚𝐩𝐩𝐫𝐨𝐯𝐚𝐥 𝐟𝐫𝐨𝐦 𝐩𝐮𝐛𝐥𝐢𝐜 𝐬𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐭𝐨 𝐭𝐡𝐞 𝐩𝐫𝐨𝐩𝐨𝐬𝐚𝐥 𝐨𝐟 𝐃𝐞𝐥𝐢𝐬𝐭𝐢𝐧𝐠:  When the aggregate shareholding of promoter / promoter group along with the other PSUs equals/ exceeds 90% of the total issued shares of the company, the requirement of seeking two-third approval from the public shareholders may be dispensed with.

5. 𝐄𝐱𝐢𝐭 𝐏𝐫𝐢𝐜𝐞 𝐭𝐨 𝐏𝐮𝐛𝐥𝐢𝐜 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬: Following options are explored to prescribe the exit price for Shareholders: (i) As per the current parameters for determination of floor price as determined under Regulation 19 A of the SEBI Delisting Regulations; or (ii) Providing exit to public shareholders on the basis of price determined by an independent registered valuer; or (iii) Any other parameters for determination of floor price

6. 𝐓𝐫𝐚𝐧𝐬𝐟𝐞𝐫𝐫𝐢𝐧𝐠 𝐭𝐡𝐞 𝐮𝐭𝐢𝐥𝐢𝐳𝐞𝐝 𝐚𝐦𝐨𝐮𝐧𝐭 𝐭𝐨 𝐭𝐡𝐞 𝐝𝐞𝐬𝐢𝐠𝐧𝐚𝐭𝐞𝐝 𝐬𝐭𝐨𝐜𝐤 𝐞𝐱𝐜𝐡𝐚𝐧𝐠𝐞: The amount lying in the escrow account or the bank guarantee for the purpose of consideration to the public shareholders, is not permitted to be released to the acquirer for a minimum period of 1 year or till the payment has been made to the remaining public shareholders who has not tendered, whichever is earlier.

A copy of the Consultation Paper is enclosed herewith. Readers can share their views with Regstreet Law Advisors at info@regstreetlaw.com.