SEBI introduces new rules for delisting companies

At a time when companies are being listed on the stock exchanges at bumper premium; the SEBI is set to amend the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations 2021 (Delisting Regulations) in India in order to promote greater transparency in the price computation methods while delisting and to ensure that public shareholders have a fair exit. The Delisting Regulations provide for a “Reverse Book Building” (RBB)method which is proposed to be replaced by a “fixed price” mechanism. The proposed amendments also aim to modify the counter offer framework while the delisting process of companies is in progress. I have written an analytical piece on these proposed amendments and their impact on public shareholder participation in the delisting process. Head over to my article on LiveLaw and give it a read. Any suggestions or point of views on the article are more than welcome and appreciated. Views in the article are personal and do not reflect the views of my organization. Link to the article: https://lnkd.in/di-HmPny #sebi #delistingprocess #corporatelaw #livelaw

Delisting process: Sebi’s fixed price model may face acceptance hurdle In this latest article on Financial Express (India), Vatsal Gaur shared valuable insights discussing the complexities of the new model. He emphasized that the appeal of a 15% premium is contingent on various factors, including market conditions, the company's valuation, and investor sentiment. Read more: https://lnkd.in/gSY2BANW #FinancialMarkets #InvestorSentiment #CompanyValuation #ShareholderValue #MarketTrends #DelistingChallenges #CorporateFinance #FinancialInsights #InvestmentStrategy #KSK

SEBI has simplified the delisting process for Indian companies by introducing a new fixed price method alongside the existing Reverse Book Building (RBB) process. Companies can now delist their frequently traded shares by offering a price at least 15% above the floor price, making it more appealing for shareholders. SEBI also revised the RBB process, lowering the required acceptance rate from 90% to 75% for counter-offers, with at least 50% of public shareholders agreeing. Additionally, SEBI introduced specific delisting rules for Investment Holding Companies and adjusted how the floor price is calculated to enhance the overall process. https://lnkd.in/gKGji2YF #SEBI #IndianMarkets #StockMarket #FinancialMarkets #Delisting #CorporateGovernance #Investment #Business #DelistingRules #ReverseBookBuilding #FixedPriceMethod #FloorPrice

Are you aware of the latest SEBI guidelines for listed companies to address market rumours and their impact on the market? Our Partner, Sanjam Arora, shares insightful perspectives with Financial Express (India) on the detailed regulations set by SEBI in collaboration with stock exchanges and industry bodies. In addition, she highlights the risk of premature disclosures and other practical challenges companies may face in managing early-stage deal disclosures. You may read the article here: https://lnkd.in/gvZfX743 #mergersandacquisitions #india #trilegal #stockexchanges #stockprices #sebi #deals

SEBI in its Board meeting on June 27 has approved some of the proposed changes to the Delisting Regulations. Some key changes include: 1. Enabling listed investment holding companies to delist by distributing their shareholdings in other listed companies and paying cash for the other assets to the public shareholders. This shall be done through a scheme of arrangement as a selective capital reduction. The qualifying listed holding companies should have shares in other listed companies constitute at least 75% of the total fair value of their assets (net of liabilities). Such companies can delist without following the reverse book building process. There will be tax issues on such capital reduction involving deemed dividend as well as capital gains based on fair value of the shares distributed and cash paid. The holding companies will also need to factor taxes in their hands arising on divestment of assets to generate the cash required. Interestingly, SEBI had recently also introduced guidelines for a call auction mechanism for better price discovery of listed holding companies. Both the moves are clearly aimed at providing a fair price availability to the public shareholders while enabling promoters to take their investment holding companies private without a significant cash outlay. 2. ⁠For frequently traded companies, a fixed price delisting has been introduced as an alternative to the reverse book building process. The fixed price should be at a 15% premium to the floor price determined as per the guidelines. This is a welcome change as it should help in mitigating some of the uncertainties associated with an RBB process. Indeed the public shareholders will have to accept the fixed price delisting offer. #delisting #sebiregulations

SEBI Regulations for IPOs: Amendments in 2024 The Securities and Exchange Board of India (SEBI) has introduced several amendments in 2024 to enhance transparency, streamline processes, and better protect investors in Initial Public Offerings (IPOs). These regulations aim to adapt to evolving market needs and ensure robust compliance. Below are some key highlights: 1. Utilization of IPO Proceeds Companies must now specify how IPO funds will be allocated for acquisitions or general corporate purposes (GCP). If specific acquisition targets are not identified, the combined allocation for GCP and future growth cannot exceed 35% of the total funds raised. This ensures transparency and accountability in fund utilization. 2. Changes in Offer for Sale (OFS) Rules New rules cap the number of shares pre-IPO shareholders can sell. Major shareholders holding over 20% of the company's shares cannot offload more than 50% of their holdings, while others are restricted to 10%. This adjustment limits large-scale exits, encouraging greater commitment to the company post-IPO. 3. Monitoring and Reporting Credit Rating Agencies (CRAs) can now act as monitoring agents for IPO funds, ensuring their utilization aligns with stated objectives. Monitoring reports are to be submitted quarterly to audit committees instead of annually, covering 100% of proceeds. 4. Revised Price Band for Book-Building For IPOs using book-building methods, the upper price band must now be at least 105% of the lower price band. This change aims to encourage more realistic pricing and protect retail investors. 5. Changes to Lock-in Periods Anchor investors now face staggered lock-in requirements: 30 days for half of their shares and 90 days for the rest. Lock-in periods for preferential issues have also been reduced for promoters and non-promoters, easing liquidity while maintaining accountability. 6. Flexibility in Offer Period Extensions Companies can now extend their offer period by a minimum of one working day (down from three days) in unforeseen circumstances, such as banking strikes or force majeure events, reducing investor inconvenience. 7. Elimination of Security Deposit Requirement SEBI has removed the mandate to deposit 1% of the issue size with stock exchanges, simplifying IPO compliance procedures. These regulatory updates not only ensure better corporate governance but also facilitate ease of fundraising for companies. By balancing flexibility for issuers with enhanced safeguards for investors, SEBI’s 2024 amendments reflect its commitment to market evolution and integrity. #SEBI #IPO #InitialPublicOffering #Compliance

Analyzing Investment Holding Companies: Key Factors to Consider In my blog post on investment holding companies, I have tried to explain the key factors investors should consider when analyzing IHCs and ICs: - Dividend policy and distribution of earnings - Quality and track record of management - Alignment of majority and minority shareholder interests - Transparency and complexity of the holding company structure - Regulatory environment and potential for value unlocking By carefully evaluating these factors, investors can make more informed decisions when investing in holding companies trading at discounted valuations. The blog post aims to provide meaningful insights for analyzing investment holding companies beyond just the discount to net asset value. I encourage you to read the full blog post to gain a deeper understanding of the nuances involved in analyzing this space. The insights shared can help investors navigate the opportunities and risks associated with holding company discounts. #Investmetholdingcompany #IHC #IC #BBTC #KICL #KAMAHOLDING #SUMMITSECURITIES

This week saw several notable on-market transactions by #directors of #ASX200 companies, each valued at more than $10,000. Here are the key highlights #stockupdate #investment #stockupdate

UPSI under PIT regulations of SEBI for listed entities: 👍 Material information would generally be Unpublished Price Sensitive Information (UPSI) 👍 Material changes in material information would lead to material changes in UPSI 👍 UPSI is triggered when there is a probability of going ahead with any significant event and concludes with final announcement of the event in public domain vide information to SEBI and Stock Exchanges 1. Regulation # 3: If one has UPSI, the same can't be shared with anyone except for a limited legitimate purpose 2. Regulation #4: If one is in possession of UPSI, one can't trade in security of that company which is also known as the "closure of the trading window" 3. Regulation #30: Material information which is unpublished information which can have a significant impact on market price of securities will be covered under UPSI Ex: A promoter selling or pledging his shares is a pre-clearance information which is confidential and hence UPSI 4. SDD entry is necessary before clearance of any liquidation of shareholding 5. Deemed UPSI would include matters of Dividend, Restructuring events including acquisition or sale of business operations 6. KPIs may be internal to any listed company but significant performance or non-performance of a KPI can be a UPSI 7. Cash Flow Forecast/Projections of a listed entity can be considered UPSI if there are key amendments like significant capex or acquisition by a company 8. Material Price Movement of shares can be triggered by : a. Unusually high dividend declaration b. Resignation of KMP//CEO/CFO c. Raising funds and acquisition of new business etc. What's needed to be done by a CO: 1. SDD entry 2. Closure of trading window 3. Notice to SEBI and Stock exchanges There have been many PIT orders issued and penalty levied by SEBI over the last couple of years. More than a dozen Compliance Officers have been penalized. SEBI and Stock Exchanges have access to a host of technological tools and software to track and ensure surveillance to track default and non-compliance.

SEBI Raises Red Flags on Shares of These Firms; Here’s What Investors Need To Know