SEBI Revolutionizes Delisting, Simplifies Process for Listed Firms

The Securities and Exchange Board of India (SEBI) has introduced a fixed price mechanism for easier delisting of companies, replacing the existing reverse book-building process. This move aims to streamline delisting processes and introduces several changes including a premium on fixed prices and an alternative framework for Investment Holding Companies.

In a significant move to enhance the ease of doing business for listed companies, the Securities and Exchange Board of India (SEBI) announced on Thursday its decision to allow firms to delist through a fixed price mechanism. This will replace the current reverse book-building process.

Under the existing system, the reverse book-building process requires shareholders to offer their securities back to promoters or large shareholders. The new fixed price process will offer shareholders at least a 15% premium over the floor price. SEBI will also introduce an alternate framework for Investment Holding Companies (IHC) through a scheme of arrangement by selective capital reduction.

This updated framework enables listed IHCs to transfer underlying equity shares to public shareholders proportionately and make cash payments against other assets. Delisting success will still require the acquirer to meet specific aggregate shareholding thresholds. Furthermore, the regulator is reducing the counter-offer threshold from 90% to 75%, provided 50% of public shareholding is tendered.

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