Analysis of the Delisting, SAST & Buy Back Analysis of the Delisting, SAST & Buy Back...
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Analysis of the
Delisting, SAST & Buy
Analysis of the Delisting, SAST & Buy Back Regulations
SEBI on March 24, 2015 issued overhauling amendments to the SEBI (Delisting of Equity Shares) Regulation, 2009 (the Delisting
Regulations) along with SEBI (Substantial Acquisition of Shares and Takeover) Regulation, 2011 (SAST/ Takeover Regulations) and
SEBI (Buy Back of Securities) Regulation, 1998 (the Buyback Regulations).
Taking into account the slower pace of Delisting offers in India, SEBI has revamped the norms that reduce the time taken for completing
the process. It has also introduced a new concept of Delisting Offers into the SAST Regulations, 2011, which aim to provide a new
opportunity to the Acquirer to even go in for delisting, by giving a Takeover Open Offer.
A major common amendment by the Board in all the three Regulations is that a Stock Exchange mechanism will be provided for
facilitating the tendering of shares by the shareholders and settlement of the same by the Stock Exchanges having
Nationwide Trading Terminal. This will relieve the shareholders from the levy of heavy Capital Gains Tax as compared to a
Main highlights of the Amendment to SEBI (Delisting of Equity Shares) Regulation, 2009:
SEBI in its Board Meeting had already primarily decided upon the various amendments it proposed to promulgate in the Delisting
Now, SEBI vide its amendment dated March 24, 2015 has inserted various new clauses as well as deleted certain Regulations and
amended certain provisions.
An analysis of the amendments in the Delisting Regulations & their impact have been provided in the given table:
Erstwhile provision New Insertion / Deletion Impact
2(1)(iva) New Insertion N.A Definition of “Promoter Group” has been
inserted which provides that it shall have the
same meaning as assigned in SEBI (ICDR)
Under the erstwhile Delisting
Regulations, while the words
“Promoter”/“PAC” were defined, but
“Promoter Group” was not there.
Amendment In all these Regulations, the
obligation to comply with the
provisions of the
Regulations was restricted
only to the “promoter” or
their “person acting in
Now, wherever the word “promoter” or “person
acting in concert” was specified, the word
“Acquirer” has also been inserted.
With the insertion of the word “Acquirer”,
the Delisting Regulations will have to be
complied with by the person who is
acquiring the shares and not just the
4(1A) New Insertion N.A A new pre-condition has been introduced
which provides that no equity shares should
have been sold by the promoter or promoter
group in past six months prior to the date of
Board Meeting which in the proposal of
delisting of equity shares of the Company is
It was observed by SEBI that in some
cases, in order to ensure success of
delisting offer, the Promoters were
selling their shares to outsiders.
Now, the Promoters would not be able to
sell their shares on one hand and on the
other, to announce delisting.
There has to be a mandatory gap of
atleast 6 months between any sale
transaction by the Promoters and the
Board Meeting, to consider delisting.
However, this pre condition of no sale
during preceding 6 months has not been
cast on the Acquirer, as defined under
Some additional conditions
and procedures have been
specified for delisting where
exit opportunity is required.
In addition to the erstwhile conditions, new
conditions has been mandated:
Conditions required to be complied prior to
Intimation to the SEs that promoters/
acquirers have proposed to delist the
Appointment of Merchant Banker to carry out
due diligence and disclosure shall be
provided to the SEs as well;
Trading details online as well offline of top 25
shareholders in past 2 years of Board
Meeting shall be obtained & to be furnished
to the Merchant Banker to carry out the due
SEBI, vide these new provisions has
made stricter compliance of all the
conditions as specified and higher
significance has been given to Merchant
Banker to carry out due diligence and
provide a report.
This insertion is purely with the intent to
safeguard the interest of shareholders of
the Company and to keep a tab on any
defrauding/ deceitful activities of the
Conditions to be complied with, while
approving the Delisting proposal, after taking
into account the Merchant Banker’s report:
BOD to certify that the Company is in
compliance with applicable securities laws;
The Promoters/ acquirers have not deployed
any deceitful activity in connection with the
Delisting. The Merchant Banker shall provide
a due diligence report to the BOD.
8(3) Amendment An In Principle application
was needed to be disposed
of by SEs within a period of
30 working days.
The duration to dispose of the application for in-
principal approval has been reduced to 5
working days instead to 30 working days.
The timeline has been reduced to
provide pace to the delisting offers so
that they can be successfully completed
in shorter span of time and there are
lesser chances of any speculation/ price
manipulative activities during the interim
10(1) Amendment There was no specific time
frame for giving the Public
Now, the PA has to be given within “one working
day” of the receipt of the In Principle
Under the erstwhile Regulations, the
Promoters used to obtain the In Principle
Approvals and then would come out with
the PA as per their own planning
Now, the detailed PA has to be made
within “one working day” of the In
A new condition has been imposed, barring the
entities belonging to the promoter/ acquirer to sell
the shares from the date of Board Meeting upto
the completion of delisting process.
This condition has been introduced to
provide fair opportunity to the investors
so that no promoter/ acquirer can sell off
its shares during the pendency of the
It can thus be inferred that no
Promoters can sell any of their
shares from 6 months prior to the
Board Meeting till the completion of
the delisting process.
Under the erstwhile
Regulations, the promoters
were to despatch the letter
of offer to the public
shareholders within 45
working days from the date
of PA, so as to reach them at
least 5 working days before
the opening of the bidding
The duration to despatch the letter of offer to the
public shareholders of equity shares has been
reduced to “2 working days instead to 45
Further, the words “so as to reach them at least
five working days before the opening of the
bidding period” have been deleted.
The timelines have been reduced further
to provide pace to the delisting offer so
that it can be successfully completed in
shorter span of time.
Under the erstwhile
Regulations, the date of
opening of the offer was
mandated to be not later
than “55 working days”
from the date of the PA.
Now, the date of opening of the offer shall not be
later than “7 working days” from the date of the
The timeline has been reduced to
provide pace to the delisting offer so that
it can be successfully completed in
shorter span of time.
13 (1A) Insertion N.A The Acquirer/ the Promoter to facilitate tendering
of shares through the SE mechanism.
Earlier, many a times, the shareholders
were not tendering their shares, for the
reason of CG tax, now, the shares
tendered under the Delisting process
would be subject to STT onl