SEBI Moots New Framework for Delisting Cos Post Open Offer

The Securities and Exchange Board of India (Sebi) has proposed to make it easier for companies to delist after an open offer by allowing the acquirer to launch both processes simultaneously.

When an open offer is triggered either through direct or indirect acquisition of more than 49% from a large exiting shareholder or a fresh issue of shares through preferential allotment by the listed company, the incoming acquirer holding can go beyond 90%. To comply with public holding norms, the acquirer must dilute to below 75% within 12 months.

However, Delisting can be attempted only when ownership by the acquirer is 90%.

“As result, even if the acquirer is desirous of acquiring 90% stake in a listed company in the first place, the acquirer, and indeed the other shareholders have to navigate three bodies of law to consider their respective rights and protections and effect three public transaction, each directionally contrary to the immediately preceding one,” Sebi said in a discussion paper on Friday.

The regulator has sought public comments by July 16. S-ET

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