Vedanta Ltd fails to get enough shares to delist from stock exchanges

Entry into capital market easier than exit due to regulatory process, say corporate compliance firms

Anil Agarwal-led Vedanta Resources on Saturday said it had failed to receive the required number of shares to delist Vedanta Limited. Accordingly, equity shares of Vedanta Limited and those tendered by shareholders in the delisting offer would continue to remain listed on the exchanges, said the company in an exchange filing.
 
Promoters of the diversified metal and mining company required 1.34 billion shares to successfully delist from exchanges. However, their five-day reverse book building (RBB) process, which ended on October 9 evening, saw only 1.26 billion confirmed bids.
 
“The withdrawal from the delisting process for any company acts as a catch-22 for the promoters/key people involved in the deal as it may trigger the insider trading probe in midst of fluctuating stock prices during the period coupled with the extremely cumbersome norms making it difficult, if not impossible to delist a company. Simply put, entry into the capital market for companies is relative easier than exiting it looking at the regulatory process,” said Makarand Joshi, partner at MMJC and Associates LLP, a corporate compliance firm.

 
According to the demand schedule released by the BSE, about 123.2 million shares tendered are yet to be confirmed.
 
"The total number of Offer Shares validly tendered by the Public Shareholders in the Delisting Offer is 1,25,47,16,610 Offer Shares, which is less than the minimum number of Offer Shares required to be accepted by the Acquirers in order for the Delisting Offer to be successful in terms of Regulation 17(1)(a) of the Delisting Regulations. Thus, the Delisting Offer is deemed to have failed in terms of Regulation 19(1) of the Delisting Regulations," Vedanta said in the exchange release.
 
Bankers and promoters had on Friday approached market regulator Securities and Exchange Board of India (Sebi) to grant an extension of one day as retail shareholders faced technical glitches and were unable to submit their bids.

 
In May, the promoters of Vedanta had announced a delisting offer at Rs 87.5 per share. Later in June, in a special resolution by postal ballot, 93.3 per cent of all shareholders and 84.3 per cent of public shareholders approved delisting of shares of Vedanta.
 
Shares of Vedanta Limited ended at Rs 122.10 per share on Friday, up 3.83 percent from their previous close.