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How to Delist

Voluntary Delisting by Small Companies

Small Company means

a. A company having paid-up capital of upto one crore and its equity shares were not traded on any exchange in the one year immediately preceeding the date of decision of delisting; OR (Regulation 27 (1))

b. A company having upto 300 public shareholders and the paid-up value of the shares held by such shareholders is upto one crore rupees. (Regulation 27 (2))

Convene a Board Meeting (Regulation 8 (1) (a))

The proposed delisting shall be approved by a resolution of the board of directors of the company in its meeting.

Appointment of Merchant Banker (Regulation 27 (3)(b)

The promoter appoint a merchant banker registered with the Board.

Outcome of Board Meeting to Stock Exchange (Clause 36 (7 (iv) of Listing Agreement)

The decision of the board meeting that the Board of directors has proposed to Delist the company from the exchanges be sent to the exchanges.

Special Resolution Through postal Ballot (Regulation 8 (1) (b))

The prior approval of shareholders of the company be taken by special resolution to be passed through postal ballot, disclosing all material facts in the explanatory statement sent to the shareholders in relation to such resolution.

Imp point:- The special resolution shall be acted upon if and only if the votes cast by public shareholders in favour of the proposal amount to at least two times the number of votes cast by public shareholders against it.

Determination of Exit Price (Regulation 27 (3)(c) :

The promoters shall determine the exit price in consultation with the Merchant Banker. The price to be offered to the public shareholders for tendering their shares shall not be less than the exit price determined.

Application for In Principal Approval to Concerned Stock Exchange (Regulation 8(1)(c )

The company makes an application to the concerned recognized stock exchange for in-principle approval of the proposed delisting in the form specified by the recognized stock exchange. The application shall be accompanied by an audit report as required under regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 in respect of the equity shares sought to be delisted, covering a period of six months prior to the date of the application.

In principal Approval by the Exchange (Regulation 8 (3))

The recognized stock exchange shall dispose off the Application of the In Principal approval complete in all respects within a period not exceeding thirty working days from the date of receipt of such application.

While considering an application seeking in-principle approval for delisting, the recognised stock exchange satisfy itself on the following grounds – (Regulation 8(4))

1. compliance with clause (b) of sub-regulation (1);
2. The resolution of investor grievances by the company;
3. Payment of listing fees to that recognised stock exchange;
4. The compliance with any condition of the listing agreement with that recognised stock exchange having a material bearing on the interests of its equity shareholders;
5. Any litigation or action pending against the company pertaining to its activities in the securities market or any other matter having a material bearing on the interests of its equity shareholders;
6. Any other relevant matter as the recognised stock exchange may deem fit to verify.

Public notice (Regulation 7 (1) (b))

The company to give a public notice of the proposed delisting in at least one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language newspaper of the region where the concerned recognized stock exchanges are located.

Letter to all public Shareholders (Regulation 27 (3(c ))

The promoters shall write individually to all the public shareholders containg the following particulars:

1. Intention of delisting the shares.
2. Exit price and justification of the exit price.
3. Seeking the consent of the shareholders for delisting and for dispensing the requirement of book building process for determination of the exit price.

Consent of the Public Shareholders (Regulation 23 (3)(d))

Atleast 90% of the public shareholders shall give their consent in writing for the delisting of the shares and the shareholders shall have the option to surrender their shares at the exit price determined or to remain the shareholders even if the shares get delisted.

Receiving consent from the Shareholders (Regulation 23(3)(e))

The process of inviting the positive consent and finalisation of the proposal for delisting of shares to be made within 75 working days of dispatching the Letter to all the shareholder .

Payment to shareholders: (Regulation 23 (3)(f))

The promoters shall make the payment in cash to the public shareholders who have tendered their shares within 15 working days from the date of expiry of 75 working days as mentioned above.

Final Application to Stock Exchange (Regulation 8 (5))

A final application for delisting be made to the concerned recognised stock exchange accompanied with such proof of having given the exit opportunity in accordance with the above said provisions.

Delisting Order

The recognized stock exchange shall dispose off the Application of the delisting complete in all respects and pass the delisting order.