The on Friday proposed changes to regulations to plug gaps in the existing framework and to enhance disclosures to help public shareholders take informed decisions.

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The regulator said the practice of giving an indicative price for the bid can be formalised. Under the current regulations, a company sets a floor price for and some go further and provide a ballpark price at which the promoters are willing to purchase shares from the public shareholders.


“Delisting regulations do not contain any provision to enable this. Indicative price may actually help the investors to gauge the inclination of the promoters and his willingness to pay such price,” said.

Experts said the floor price is provided due to regulatory reasons, but if promoters given an indicative price, it will provide a better picture to investors.

Further, has asked independent directors to give reasoned recommendations on the delisting proposal for the benefit of public shareholders. Also, the voting pattern of independent directors on the board resolution will also have to be disclosed.

Also, the company will have to make a stock exchange disclosure on the same day it is intimated of the voluntary delisting by the promoters.

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Sebi has also proposed to shorten the time period to convene a board meeting for approving the delisting proposal to 21 working days from the date of receipt of the proposal.

The regulator has also sought several changes to the so-called reverse book building (RBB) process—used to arrive at the discovered price for delisting.

Sebi has barred companies from disclosing unconfirmed bids to the stock exchanges. The proposal stems from the recent delisting fiasco at Vendata, where initially it appeared that the company had secured the minimum number of bids required for the delisting to go through. However, later over 20 million unconfirmed bids went missing, resulting into failure of the bid.

Sebi said the outcome of RBB in terms of its success or failure should be announced within two hours of the closure of the tendering period.

Further, the promoters will have only two days instead of five for making a public announcement for giving either counter offer or accepting or rejecting the discovered price.

Sebi said promoters have to accept delisting price, if the price discovered through RBB is same as floor price.

If the delisting is successful, Sebi has proposed to relax the cooling off period for re-listing to three years from five years.

Also the time gap between two delisting offers is being reduced to just six months.

Experts said the new norms will help in streamlining the delisting process but will have little influence on the success of it.

“The proposal is helpful in tightening the delisting process for the benefit of public shareholders. Some gaps which can result in delays in completing the process have been plugged. However, none of these changes will impact the success rate of delisting offers. A number of delisting offers have failed because the price determined by the public shareholders through the reverse book building process is unreasonably high. Unless there is some reform in that area, delisting offers will remain less attractive. The changes will give the delisting regulations a new shine, but not necessarily positive results,” said Vikram Raghani, (Partner) at J Sagar Associates.

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