SEBI Delisting norms
Why in news:
- The Securities and Exchange Board of India (SEBI) is reviewing delisting regulations for listed companies in an attempt to rein in the manipulation of shares of a company that has opted for delisting from the stock exchanges.
- The capital markets regulator has said it may allow companies to delist shares at a fixed price, as against the current ‘reverse book-building’ process.
What does delisting of securities mean?
- Delisting means removing the securities of a listed company from a stock exchange.
- Once delisted, the securities of that company can no longer be traded on the stock exchange.
- Delisting can be either voluntary or compulsory.
- In voluntary delisting, a company decides on its own to remove its securities from a stock exchange.
- In compulsory delisting, they are removed as a penal measure for the company not making submissions or complying with requirements set out in the listing agreement within the prescribed timeframes.
- If a company wants to delist its securities, it needs to buy back 90% of the total issued shares.
What is the reverse book-building process?
- Reverse book-building is the process used for price discovery. During the period for which the reverse book-building is open, offers are collected from shareholders at various prices, which are above or equal to the floor price.
- The buyback price is determined after the offer closing price.
About SEBI:
- The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India.
- It was established on 12 April 1988 as an executive body and was given statutory powers on 30 January 1992 through the SEBI Act. 1992.
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
- to approve by−laws of Securities exchanges.
- to require the Securities exchange to amend their by−laws.
- inspect the books of accounts and call for periodical returns from recognised Securities exchanges.
- inspect the books of accounts of financial intermediaries.
- compel certain companies to list their shares in one or more Securities exchanges.
- registration of Brokers and sub-brokers.
Syllabus: Prelims
SOURCE: THE INDIAN EXPRESS
