November 28, 2006
Changes to Delisting Guidelines proposed
The Securities and Exchange Board of India (“SEBI”) has on November 23, 2006 issued a concept paper on the proposed SEBI (Delisting of Securities) Regulations, 2006 (“Regulations”) with a view to give a statutory force to the extant SEBI (Delisting of Securities) Guidelines, 2003 (“Guidelines”) and to amend certain provisions relating to computation of offer price, minimum public float, time lines etc.
The Guidelines, which are currently in force, lay down the norms and procedures for delisting of securities of companies listed on the recognized stock exchanges. However, because of the fact that the existing framework is in the form of guidelines which do not have statutory force, SEBI has proposed to formalize the framework in the form of regulations, which have the sanction of the legislature and consequently are more effective for enforcement.
Additionally, there are some aspects of the Guidelines that are sought to be amended in the proposed Regulations in order to eliminate any practical difficulties from enforcing the regulations as well as to iron out any inconsistencies with other SEBI regulations.
The key changes proposed to be made in the Regulations are set out below:
Most of the changes proposed in the Regulations try to address the lacunae in the Guidelines not just from investor protection point of view but also seek to streamline the exit offer process and lend some amount of certainty therein. Many existing provisions under the SEBI Takeover Code relating to computation of fair price, procedures and time lines for the consummation of the exit offer are now brought in to the Regulations. By virtue of enacting the Regulations the provisions there under have a binding and statutory force, thereby facilitating ease in the prosecution process in case of default as compared to Guidelines. As the Regulations are in the form of a concept paper, SEBI is currently inviting comments from the public and hence the final form of the Regulations remains to be seen.
Source: SEBI website www.sebi.gov.in
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