31 Aug 2023
Take-private transactions pose unique challenges for regulators, given that they involve strong competing policy objectives – incentivising efficient allocation of capital and value-accretive public M&A on the one hand, and ensuring protection of interests of public shareholders in an asymmetric informational environment, on the other. The Indian securities regulator – the Securities and Exchange Board of India (SEBI) – has also grappled with this conflict and currently mandates a unique ‘reverse book building’ (RBB) method of price discovery, with the objective of securing a fair exit price for public shareholders. There is general market consensus that the RBB mechanism has made the delisting process complex, costly, uncertain and prone to manipulation.
In a welcome move, SEBI has proposed a new method for delisting at a ‘fixed price’ through its consultation paper of 14 August 2023 (Consultation Paper). The existing rules and the key highlights of the proposed changes are discussed below.
Under the existing SEBI (Delisting of Equity Shares) Regulations, 2021 (Delisting Regulations), an acquiror/promoter1, who proposes to delist the shares of a listed company (Listco) from the stock exchanges, is required to provide an exit opportunity to public shareholders of the Listco (through a delisting offer). Under the delisting offer, the acquiror offers to buy-out the public shareholders in the Listco at a price to be determined under the Delisting Regulations.
Download PDF to read more
If you would like to receive content directly in your inbox from our knowledge repository, please complete this subscription form. This service is reserved for clients and eligible contacts.
Under the rules of the Bar Council of India, Trilegal is prohibited from soliciting work or advertising in any form or manner. By accessing this website, www.trilegal.com, you acknowledge that:
We prioritize your privacy. Before proceeding, we encourage you to read our privacy policy, which outlines the below, and terms of use to understand how we handle your data:
For more information, please read our terms of use and our privacy policy.
