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Trilegal Update | Navigating SEBI’s revamped delisting framework

08 Oct 2024

Trilegal advised JSW Infra and JSW Port Logistics in connection with the proposed open offer by JSW Port

SEBI has revamped the delisting framework in India by introducing fixed price delisting (for companies with frequently traded shares) as an alternative to the regular reverse book-built price delisting. To determine the floor price for any delisting offer, the ‘adjusted book value’ of the listed entity must also be taken into account. For a fixed price delisting, the acquirer will be required to offer at least 15% premium to the floor price to the public shareholders.

Partner: Harsh Maggon, Senior Associates: Nehal Binani, Wamika Jha, Associate: Santosh S

Between 1 January 2018 and 31 May 2024, out of the 40 companies which attempted to delist from the stock exchanges, only 26 companies (and only six companies having market cap of more than INR 500 crore) have successfully delisted themselves. While the Securities and Exchange Board of India (SEBI) has sought to regulate the securities markets to protect the best interests of minority public shareholders, the intention was never to make delisting so difficult.

In an attempt to simplify the delisting regime in India, SEBI notified the SEBI (Delisting of Equity Shares) (Amendment) Regulations, 2024 on 25 September 2024, introducing the following key amendments to the SEBI (Delisting of Equity Shares) Regulations, 2021 (Delisting Regulations):

Permitting a fixed-price delisting for listed companies whose shares are frequently traded. Prior to the amendments, a delisting offer under the Delisting Regulations could be made exclusively through the reverse book building (RBB) route.
Ability for the acquirer to make a counter-offer in an RBB delisting subject to minimum public tendering and a higher revised offer price.
Provision for delisting of investment holding companies (IHC) through a scheme approved by the National Company Law Tribunal (NCLT).

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Trilegal Update | Navigating SEBI’s revamped delisting framework

Partner: Harsh Maggon, Senior Associates: Nehal Binani, Wamika Jha, Associate: Santosh S

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