2 May 2017 • Mayank Verma
SEBI vide circular dated May 30, 2012 issued guidelines facilitating the exit of Derecognized/Non-operational stock exchanges and exit to the shareholders of exclusively listed companies (ELCs) by allowing them to get listed on nationwide stock exchanges after complying with the diluted listing norms of nationwide stock exchanges, failing which they would be moved to the Dissemination Board (DB). Further, SEBI vide circular dated May 22, 2014, inter-alia, provided that ELCs, on de-recognized/non-operational stock exchanges, can also opt for voluntary delisting by following the existing delisting norms of SEBI. It was also specified that if the ELCs fail to comply with the same, they shall be moved to DB. Subsequently, SEBI vide circular dated April 17, 2015 allowed a period of eighteen months’ time to ELCs on DB to obtain listing upon compliance with the listing requirements of the nation-wide stock exchanges and The ELCs which fail to list on the nationwide stock exchanges under the aforesaid mechanism shall provide exit opportunity to its members/investors.
As per the SEBI vide their circular number SEBI/HO/MRD/DSA/CIR/P/2017/27 dated March 27, 2017 and SEBI/HO/MRD/DSA/CIR/P/2016/110 dated October 10, 2016 the following steps have been identified for exit of ELCs from DB of BSE by way of delisting of shares:
Step – 1: Intimation of Plan of Action to the Designated Stock Exchange
- The ELCs on the DB which are yet to indicate their intention to provide exit shall submit their plan of action to designated stock exchanges latest up to June 30, 2017 to the satisfaction of the designated stock exchanges.
- The designated stock exchanges shall review the plan of action and ensure completion of the process within 6 months.
If we opt for the Delisting of Shares then there are practically two possibilities i.e. either there is public stake involved in the ELC or entire shareholding is held by Promoters only. If there is public stake involved in the ELC then the following steps shall be followed:
Step – 2: Appointment of Independent Valuer
- The promoter in consultation with the designated stock exchange shall appoint an ‘independent valuer’ from the panel of expert valuers of the designated stock exchange.
- In case the fair value determined is positive the promoter of the company shall acquire shares of such companies from the public shareholders by paying them such value determined by the valuer.
- In case the fair value determined is nil or negative the promoters of the company shall acquire shares of such companies from the public shareholders by paying them such value as obtained after further discussion with Merchant Banker.
Step – 3: Acquisition of shares
- The promoter shall undertake to complete the entire process within seventy five working days.
Step – 4: Mode of payment
- The promoter shall open an escrow account in favor of independent valuer/designated stock exchange and deposit therein the total estimated amount of consideration on the basis of exit price and number of outstanding public shareholders.
Step – 5: Application to Designated Stock Exchange for Exit Scheme
- An Application in prescribed form shall be made to designated stock exchange for informing option given by SEBI in its circular dated October 10, 2016 and to obtain a temporary user id and Password for uploading of various documents.
Step – 6: Newspaper Advertisement
- The promoter of the company to make a public announcement in at least one national daily with wide circulation, one regional language newspaper of the region where the exited stock exchange was located and the website of the designated stock exchanges.
Step – 7: Offer Period
- The exit offer shall remain open for a period of minimum five working days during which the public shareholders shall tender their shares.
Step – 8: Payment
- The promoter shall make payment of consideration within fifteen working daysfrom the date completion of offer.
Step – 9: Certification by Promoter
- The promoter shall also certify to the satisfaction of designated stock exchange that appropriate procedure has been followed for providing exit to shareholders of such companies. Subsequently, the designated stock exchanges upon satisfaction shall remove the company from the dissemination board.
In Case entire shareholding of the Company is held by promoters only then the following procedure has to be followed:
Step – 1: Seek an empanelled Independent professional
- An empanelled Independent Professional is the SEBI Registered Category I Merchant Banker.
Step – 2: Newspaper Advertisement
- The promoter of the company to make a public announcement in at least one national daily with wide circulation, one regional language newspaper of the region where the exited stock exchange was located and the website of the designated stock exchanges
Step – 3: Preparation and filing of documents by ELC and Empanelled Independent Professional
- Letter from an empanelled Independent Professional and ELC informing the Exchange that 100% equity shares of the company are held by promoters and none of the shares of the company are held by public shareholders and that letter shall also state the date from which promoters are holding 100% equity shares of the company and the said company has complied with all the requirements of said SEBI circular dated October 10, 2016 and is eligible to be removed from the DB.
- ELCs also required to submit latest shareholding pattern (format as per Regulation 31of SEBI LODR) duly certified by the company and the RTA showing 100% promoter holding.
- Copy of public Announcement made in Step – 2.
BSE Link: http://www.bseindia.com/investors/disseminationboard.aspx?expandable=6