The market regulator has finally woken up. After a host of Indian subsidiaries of multinational firms delisted their companies from bourses, the Securities and Exchange Board of India (Sebi) has now made reverse book-building mandatory for companies planning to delist their shares. It has asked companies/promoters who wish to delist their securities from one or more than one stock exchanges (SE) that they will have to offer an exit route to the remaining shareholders through the book-building route. According to the new norms for delisting to be called ‘Sebi (Delisting of Securities) Guidelines 2003’, the promoter will offer the floor price to the shareholders on the basis of average of previous 26 weeks highs and low prices to investors. Over two dozen MNCs have already delisted from Indian bourses and nearly 90 others are in the pipeline. The final offer price will be determined as the price at which the maximum number of shares has been offered. ‘The acquirer will have the choice to accept the price. If the price is acceptable to the acquirer, then the acquirer will have to accept all offers up to and including the final price but may not have to accept higher priced offers,’ Sebi said. The promoter is also expected to deposit 100 per cent of the estimated amount of consideration calculated on the basis of the floor price indicated and the number of shares required to be acquired in the escrow account, the Sebi release added. The offer to buy will remain open to the security holders for a minimum period of three days. The security holders will have the right to revise their bids before the closing of the bidding and the investors who wish to participate in the offer can approach trading members of the SE who are appointed by the company or the acquirer. At the end of the book-building period of the three days, the merchant banker to the exercise will have to announce the final price and the acceptance (or not) of the price by acquirer. The acquirer will make the requisite funds available with the exchange\clearing corporation on the final settlement day, which will be three days from the end of the book build period. The trading member will correspondingly make the shares available and on the settlement day the funds and securities will be paid out in process akin to secondary market settlements, it said. However, these entire exercise will be for demat shares while for the holders of physical certificates the offer will be kept open for a period of 15 days from the final settlement for the shareholders to lodge the certificates with custodians specified by the merchant banker. These guidelines will be applicable to delisting of securities of companies and will also apply to promoters of company who seek voluntary delisting. It will also apply to any acquisition of shares of company (either by way a promoter or by any other person) or scheme or arrangement, by whatever name referred to, consequent to which the public shareholding falls below the minimum limit specified in the listing agreement that may result in delisting of securities.
