SECURITIES AND EXCHANGE BOARD OF INDIA (DELISTING OF SECURITIES) GUIDELINES - 2003

3 · DEFINITIONS

3 · 1 In these Guidelines, unless the context otherwise requires:-

3 · 2 Words and expressions not defined in these Guidelines shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956 or the Companies Act, 1956, or any statutory modification or re-enactment thereof, as the case may be.

4 · APPLICABILITY

4 · 1 These guidelines shall be applicable to delisting of securities of companies and specifically shall apply to:

4 · 2 Provided that company shall not be permitted to use the buy-back provision to delist its securities.

5 · DELISTING OF SECURITIES (VOLUNTARY) OF A LISTED COMPANY

5 · 1 A company may delist from stock exchange where its securities are listed.

5 · 2 An exit opportunity need not be given in cases where securities continue to be listed in a stock exchange having nation wide trading terminals.

6 · PROCEDURE FOR VOLUNTARY DELISTING

6 · 1 Any promoter or acquirer desirous of delisting securities of the company under the provisions of these guidelines shall : -

7 · PUBLIC ANNOUNCEMENT FOR VOLUNTARY DELISTING

7 · 1 Before making application for delisting, the promoters or the acquirers of the ompany shall make a public announcement.

7 · 2 The public announcement shall contain inter-alia information specified in Schedule I.

7 · 3 Before making the public announcement, the promoter shall appoint a merchant banker registered with the Board, who is not an associate of the promoter.

8 · EXIT PRICE FOR VOLUNTARY DELISTING OF SECURITIES

8 · 1 Any promoter of a company which desires to delist from the stock exchange shall determine an exit price for delisting of securities in accordance with the book building process described in Schedule II of these guidelines.

8 · 2 The offer price shall have a floor price, which will be the average of 26 weeks traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 week from the date of the public announcement and without any ceiling of maximum price.

8 · 3 In the case of infrequently traded securities the offer price shall be as per regulation 20(5) of the SEBI (Substantial Acquisition and Takeover) Regulations, and the infrequently traded securities shall be determined in the manner explained under regulation 20(5) of the SEBI (Substantial Acquisition and Takeover) Regulations.

8 · 4 The stock exchange(s) shall provide the infrastructure facility for display of the price at the terminals of the trading members to enable the investors to access the price on the screen to bring transparency to the delisting process.

8 · 5 In the event of securities being delisted, the acquirer shall allow a further period of 6 months for any of the remaining shareholders to tender securities at the same price;

8 · 6 The stock exchanges shall monitor the possibility of price manipulation and keep under special watch the securities for which announcement for delisting has been made.

8 · 7 To ascertain the genuineness of physical securities if tendered and to avoid the bad delivery, Registrar and Transfer Agent shall co-operate with the Clearing House / Clearing Corporation to determine the quality of the papers upfront.

8 · 8 If the quantity eligible for acquiring securities at the final price offered does not result in public shareholding falling below required level of public holding for continuous listing, the company shall remain listed.

8 · 9 The paid up share capital shall not be extinguished as in the case of buyback of securities;

8 · 10 In case of partly paid-up securities, the price determined by the book building process shall be applicable to the extent the call has been made and paid.

8 · 11 The amount of consideration for the tendered and acceped securities shall be settled in cash;

9 · RIGHT OF PROMOTER

9 · 1 The promoter may not accept the securities at the offer price determined by the book building process.

9 · 2 Where the promoter decides not to accept the offer price so determined:

9 · 3 For the purposes of sub-clause 9.2(b), the public shareholding may be increased by any of the following means:

9 · 4 In the event of the promoter not being able to raise the public shareholding in accordance with sub-clause 9.3 within six months, he shall offer for sale to the public such portion of his holdings as would bring up the public shareholding to the minimum limits specified in the listing agreement or the listing conditions at the price determined by the Central Listing Authority.

10 · PUBLIC ANNOUNCEMENT OF FINAL PRICE

10 · 1 On determination of the final price pursuant to the book building, the promoter or the acquirer shall within a period of two working days from such determination:

11 · DELISTING FROM ONE OR MORE STOCK EXCHANGES

11 · 1 When a company which is listed on any stock exchange or stock exchanges other than the stock exchanges having nationwide trading terminals, seeks delisting, an exit offer shall be made to the shareholders in accordance with these guidelines.

11 · 2 There shall not be any compulsion for the existing company to remain listed on any stock exchange merely because it is a regional stock exchange.

12 · MINIMUM NUMBER OF SHARES TO BE ACQUIRED

12 · 1 Where the offer for delisting results in acceptance of a fewer number of shares than the total shares outstanding and as a consequence the public shareholding does not fall below the minimum limit specified by the listing conditions or the listing agreement, the offer shall be considered to have failed and no securities shall be acquired pursuant to such offer.

13 · PAYMENT OF CONSIDERATION

13 · 1 The payment of consideration for delisting of securities shall be paid in cash by the promoter or acquirer.

14 · DELISTING OF ONE OR ALL CLASS OF SECURITIES

14 · 1 A company may delist one or all of its class of securities subject to the provisions of this clause.

14 · 2 If the equity shares of a company are delisted, the fixed income securities may continue to remain listed on the stock exchange.

14 · 3 A company which has a convertible instrument outstanding, it shall not be permitted to delist its equity shares till the exercise of the conversion options.

15 · COMPULSORY DELISTING OF COMPANIES BY STOCK EXCHANGES

15 · 1 The Stock Exchanges may delist companies which have been suspended for a minimum period of six months for non-compliance with the Listing Agreement.

15 · 2 The Stock Exchanges may also delist companies as per the norms provided in

15 · 3 The Stock Exchange shall give adequate and wide public notice through news papers ( including one English national daily of wide circulation) and through display of the notice on the notice board/ website/ trading systems of the Exchange.

15 · 4 The stock exchange shall give a show cause notice to a company or adopt procedure provided under Part B of Schedule III for delisting under sub-clause 15.1 and 15.2.

15 · 5 The exchange shall provide a time period of 15 days within which representation may be made to the exchange by any person who may be aggrieved by the proposed delisting.

1 · 15.6 The stock exchange may, after consideration of the representations received from aggrieved persons, delist the securities of such companies.

15 · 6 A Where the stock exchange delists the securities of a company, it shall ensure that adequate and wide public notice of the fact of delisting is given through newspapers and on the notice boards/trading systems of the stock exchange and shall ensure disclosure in all such notices of the fair value of such securities determined in accordance with the Explanation to clause 16.1

15 · 7 The stock exchange shall display the name of such company on its website.

16 · RIGHTS OF SECURITIES HOLDERS IN CASE OF COMPULSORY DELISTING

16 · 1 Where the securities of the company are delisted by an exchange, the promoter of the company shall be liable to compensate the security-holders of the company by

1 · Substituted by amendment vide circular dated January 31, 2006. The earlier clause read as –

15 · 6 The stock exchange shall ensure that adequate and wide public notice is given through newspapers and on the notice boards/trading systems of the stock exchanges after the period of show cause is over.

2 · Explanation: For the purposes of this sub-clause, fair value of securities shall be determined by persons appointed by the stock exchange out of a panel of experts, which shall also be selected by the stock exchange, having regard to the factors mentioned in regulation 20 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

3 · 16.2 – deleted

17 · DELISTING PURSUANT TO RIGHTS ISSUE

17 · 1 In case of rights issue, allotment to the promoters or the persons in control of the management shall be allowed even if they subscribe to unsubscribed portion which may result in public shareholding falling below the permissible minimum level.

17 · 2 In case the rights issue is not fully subscribed, which may result in the public shareholding falling below the permissible minimum level as specified in the listing condition or listing agreement, the promoter(s) of the company shall be required to delist by providing an exit opportunity in the manner specified in clause 17.1 of these guidelines or may be required to make offer for sale of their holdings so that the public shareholding is raised to the minimum level specified in the listing agreement or in the listing conditions within a period of 3 months.

2 · Substituted by amendment vide circular dated January 31, 2006. The earlier clause read as – Explanation: For the purposes of this sub-clause fair value shall be determined by the arbitrator having regard to the factors mentioned in Regulation 20 of the Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997 .

3 · Deleted by amendment vide circular dated January 31, 2006. The deleted clause read as –

16 · 2 The security holders may enforce their claim to compensation/fair value under this clause through the arbitration mechanism of the exchange in the manner laid down in its byelaws.

18 · REINSTATEMENT OF DELISTED SECURITIES

18 · 1 Reinstatement of delisted securities should be permitted by the stock exchanges with a cooling period of 2 years. In other words, relisting of securities should be allowed only after 2 years of delisting of the securities. It would be based on the respective norms/criteria for listing at the time of making the application for listing and the application will be initially scrutinized by the Central Listing Authority.

10 · If final price is accepted the acquirer shall have to accept offers up to and including the final price i.e. 240 shares at the final price of Rs. 130/-.

11 · At the end of the book build period the merchant banker to the book building exercise shall announce in the press and to the concerned exchanges the final price and the acceptance (or not) of the price by the acquirer.

12 · The acquirer shall make the requisite funds available with the exchange/clearing corporation on the final settlement day (which shall be three days from the end of the book build period). The trading members shall correspondingly make the shares available. On the settlement day the funds and securities shall be paid out in a process akin to secondary market settlements.

13 · The entire exercise shall only be available for demat shares. For holders of physical certificates the acquirer shall keep the offer open for a period of 15 days from the final settlement day for the shareholders to lodge the certificates with custodian(s) specified by the merchant banker.