Delisting process: Sebi provides clarity for small companies

Promoters of small companies who get written consent from at least 90 per cent of the public shareholders to delist shares will be considered to have complied with the delisting norms, according to Sebi.
The clarification has been provided in the latest set of Frequently Asked Questions (FAQs) on Sebi (Delisting of Equity Shares) Regulations, 2009.
"The promoter of a small company would be considered to have complied with the condition under regulation 27(3)(d), if the public shareholders, irrespective of their numbers, holding 90 per cent or more of the public shareholding give their positive consent in writing to the proposal for delisting," Sebi said.

In this regard, the regulator has also made a reference to a Securities Appellate Tribunal's order in November 2011 related to matter of V T Somasundaram and Trichy Distilleries and Chemicals Ltd versus Madras Stock Exchange and Sebi.
In that case, the tribunal had ruled that getting consent from over 90 per cent public shareholders satisfies the requirements of 27(3)(d).
With respect to voluntary delisting of small companies, entities having a paid up capital of less than Rs 10 crore and net worth below Rs 25 crore would not be required to follow the Reverse Book Building process subject to certain conditions.

The relaxation is applicable only for companies "whose equity shares have not been frequently traded on any recognised stock exchange for a period of one year and has not been suspended for any non-compliance in the preceding one year".
In such cases, the promoter decides the exit price in consultation with the merchant banker and then the public shareholders are informed.
Once the requisite consent is received, the promoter makes payment of consideration for the same and the shareholders can exit, as per Sebi.