Project On Delisting of Equity Shares Navneet

A
SEMINAR REPORT
ON
DELISTING OF EQUITY SHARES
Submitted to
GURU NANAK DEV UNIVERSITY AMRITSAR
in partial fulfillment for the degree of Master of COMMERCE
3rd sem(2nd year)
( Session 2014-2015)
Submitted to :Saurabh Kataria
Submitted by: Navneet kaur

M.COM 2nd Year
Lecturer in Commerce
University roll noPost Graduate department of Commerce and business management

Hindu College
DECLARATION
I hereby certify that the work embodied in the seminar report ,DELISTING
OF EQUITY SHARES submitted to GURU NANAK DEV UNIVERSITY,
Amritsar in Degree of M.com 3rd sem is my original work and has not been
submitted by any degree or diploma at this or any other university,
ACKNOWLEDGEMENT
My sincere thanks are due to all the contributors without whose efforts this
seminar report would not have been completed. No task of this nature is a
single person effort, so I am very thankful to Prof My SAURABH
KATARIA
Under whose guidance I successfully completed my seminar report . Their
unfailing interest and support gave a new dimension to my work. They made
it possible to collect abundance of material, the relevant portion of which is
quoted in this seminar report.
I am also very grateful to Prof.Renu Sareen head department of commerce
and business administration who helps me in completion of my seminar
report without any difficulty .I also express my gratitude to the all
respondent for their proper responses and cooperation during my dissertation
project .I would like to extend my thanks to my all friends for their valuable
suggestion and cooperation at various stages during my seminar report.
Navneet kaur
CHAPTER 1
INTRODUCTION
Meaning of Delisting
Since Listing means admission of a Companys securities to the trading platform
of a Stock Exchange, so as to provide marketability and liquidity to the security holders.
LISTING
= STOCK EXCHANGE
COMPANY
Delisting is totally the reverse of listing. Delisting means removal of securities of

a listed company from a stock exchange. As a consequence of delisting, the securities of
that company would no longer be tradeable at that stock exchange.
DELISTING
STOCK EXCHANGE
COMPANY
5
Delisting can be:
Voluntary Delisting
Compulsory Delisting
Thus, delisting can be voluntary i.e. at the will of the company or compulsory
which is due to the violation of regulations and failure to meet the listing requirements of
Stock Exchange. In order for a stock to be traded on an exchange, the company that
issues the stock must meet the listing requirements set out by the exchange. Listing
requirements include minimum share prices, certain financial ratios, minimum sales
levels, and so on. If listing requirements are not met by a company, the exchange that lists
the company's stock will probably issue a warning of non-compliance to the company. If
the company's failure to meet listing requirements continues, the stock exchange may
delist the company's stock which is referred to as Compulsory Delisting.
Delisting is
different from the buy back of securities since in case of buy back of securities, company
itself is the acquirer and thus provides the funds for buy back, but in case of delisting, the
securities are acquired by a person other than the company and the funds have to be
provided by that acquirer. Thus, these two processes are fundamentally different, thus the
concern and safeguards for the shareholders should also be different.
Delisting is characterized by the Reverse Book Building Process in order to
determine the Offer Price. All the public shareholders of the equity shares which are
sought to be delisted shall be entitled to participate in the reverse book building process
where the aim is to exit from the company. Thus, the process adopted is the same which
is adopted in case of initial public offer process in which the aim is to invest in the
company but in case of Delisting, the aim is to exit from the company.
EVOLUTION OF DELISTING IN INDIA

In the earlier days, the public issues of shares and their pricing was looked after
by the Controller of Capital Issues (CCI). But, in 1992, CCI was abolished and since then
the issue of securities is being looked after by Securities and Exchange Board of India.
The purpose of establishing SEBI under SEBI Act, 1992 was to protect the
interests of the investors in securities and to promote the development of, and to regulate,
the securities market and for matters connected therewith or incidental thereto. Thus,
SEBI prescribes the procedures, formulate the strategies and laws to regulate the
securities market.
In one of such attempts, SEBI in the year 2002 constituted a committee on
delisting of shares to examine and review the conditions for delisting of securities of
companies listed on recognized stock exchanges, because Delisting from Indian stock
exchanges has become a major issue for the financial regulator and the finance ministry
to tackle. Almost every shareholder/investor has faced a scenario of having shares of a
company that is seeking delisting from the stock exchange.
There is a growing trend of delisting of shares from Indian Stock Exchanges. The
Multi National Companies have also been seeking delisting from the stock exchanges for
a variety of reasons an the number of such companies has been on the increasing trend.
This trend has engaged the attention of public, media and investor associations and has
caused uneasiness and anxiety among investors.
At that time, the main concern was against the inadequacy of investors
protection through the prevailing exit price mechanism. On the basis of the report of this
committee, SEBI issued SEBI (Delisting of Securities Guidelines), 2003.
The salient features of Guidelines issued in 2003 were:

Public Shareholders will be an exit option if the company or its promoters
propose to delist its securities from all the stock exchanges on which they were
listed. However, no exit opportunity was required to be given in case the company
continues to remain listed at stock exchanges having Nationwide trading
terminals.
Price discovery by Reverse Book Building process.
Eligibility to participate in the book building process was available only to demat
shareholders.
Option available to the promoters to accept or reject the price determined by the
book building process.
The exit option to remain open for a period of 6 months after the closure of the
offer.
These Guidelines covered the issues involved in Delisting of Securities to a
great extent. However, there were certain areas over which hue and cry was made.
Various representations and views, from intermediaries, stock exchanges, shareholders
associations, chambers of commerce etc were given to the Regulators on the operational
issues and procedural complications in the guidelines. Based on such representations, it
was proposed to look into and suggest changes in the guidelines.
REASONS FOR DELISTING

1. Non-compliance with Regulatory Framework: Notwithstanding the structural
shortcomings in regulatory framework which is the pathetic monitoring of the listed
companies results into mechanical delisting by the stock exchange which is referred
to as Compulsory Delisting. Stock Exchanges have minimum requirements for the
companies to remain listed on the exchange and in order to be traded on the
exchange, company has to comply with those requirements which may be regarding
the minimum share prices, minimum sales level and filing of financial reports etc.
And if the company fails to comply with these requirements, then the stock exchange
may delist its sock. Prior to delisting, show-cause notices are to be sent to the
company but no intimation and exit option is required to be given to the non-promoter
shareholders. Only wide public notices through newspapers and notice boards
are to be issued by the Stock Exchange. Securities and Exchange Board of India
2. Capital Savings: The costs of being publicly traded company are substantial and are
occasionally difficult to justify with a low market capitalization. As a result,
deregistering can save a company millions and reward shareholders with a higher net
income and earnings per share.
3. Relaxation of Regulations: Sometimes, companies go in for delisting in order to

avoid the administrative process of complying with the regulatory requirements. For
example, MNCs try to repatriate huge amount of profits to their parent companies
every year in the form of huge dividend payouts. So, they plan to eventually delist the
Indian subsidiary so that they do not have to comply with the rules and regulations for
8
being listed on the Indian stock exchanges. So, delisting provides a sensible option to
such MNCs which have major growth plans in India, since their managements want
to enjoy entrepreneurial freedom without any regulatory oversight so that they can
run operations without worrying about conflict of interest.
4. Moving Offshore: The companies that move offshore are either taken over by
foreign companies or move their listing offshore without a substantive change in
ownership.
DELISTING: BOON OR A BANE

A stock that is delisted cannot be traded on that particular stock
exchange. Thus, the stock is much harder to trade which makes it more illiquid. The
question that arises is what should such investors do, whose investments
become illiquid and who had invested in a particular company on the basis of
the faith and trust in the system and also on the basis of the contents in the
prospectus which mentions that the security would be listed on stock exchanges.
Since, if the securities of a company get delisted, then the investment will no longer
be marketable and tradeable. And then, on top of it, these companies have delisted
either themselves or the Exchanges delist them for non compliance or not meeting
the criterion. In such circumstances, the shareholders are left in lurch with no option
but to tender their shares at whatever price, which may be much lesser than the
actual value of the Company. According to SEBI Delisting Guidelines 2003,the
companies which have got themselves delisted, they have paid their shareholders
according to the higher of the average of the weekly closing highs and lows for 26
weeks or 2 weeks.
Recently, a SEBI Committee conducted a study on 29 companies, which
have been or are in the process of being delisted from the BSE, and it came to light
that in 14 out of the studied 29 companies, the 52-week average was greater than
the 26 weeks average. That is to say, the securities had a much better potential if
they would have remained listed on the Exchange and the shareholders would have
taken an exit in the ordinary course of trading in the Secondary Market. Thus, at
this point, investors suffer losses. The shareholders of such companies, although are
able to get back the market price of their shares but there is always an apprehension
that they could have got a better price if they would have exit through the
Secondary Market.
From shareholders point of view, although he might be receiving a lesser value
than the actual worth, but he stands to benefit in the sense that his blocked funds get
released, which now he can utilize in the other scrips. Also, he is relieved from the
tension of carrying dead stock on his head.
There is yet another set of companies, that come out with Public Issues, utilize the
shareholders funds, stopped making compliances with the Stock Exchange, the
Stock Exchange suspends them, and as per the Guidelines, finally compulsorily
delist them. In fact, there is a long list of such companies which have been delisted
by the Stock Exchanges. Thus, at this point, the very objective of SEBI i.e.
investors protection is still questionable?
But from the Regulators (the Exchanges, SEBI etc.) point of view, such delistings
are important because this cleans up the system and relieves them of the dead
woodstock.
Demand for the shares will drop significantly because many institutional investors
are prohibited from investing in such stocks. When there is less demand for the
stock of a company, liquidity of the shares could be a problem. In other words,
trying to sell the shares may take longer than it would have taken at the major
exchanges.
The stocks which are delisted from the Stock Exchange due to an elevation of
market listing standards, it has been observed that there is a decrease in trading
volume after delisting. A significant negative stock price reaction around the
delisting announcement period is also observed.
10
On a comparison of all the above situations, it can be said that if the

situation is beneficial for one, the other stands to lose. In certain situations, delisting
becomes imperative to relieve the system of the unwanted trash companies. Thus, a
complete ban on delisting is not possible. A judicious mix of listing and delisting has to
be there in the system, to make it run smoothly.
VOLUNTARY DELISTING OF EQUITY SHARES

Voluntary Delisting, as its name implies, is done by the stock exchange at the will of the
company. Under Voluntary Delisting, two options are available with the company:
Voluntary Delisting with NO EXIT OPPORTUNITY to the public shareholders.
Voluntary Delisting with EXIT OPPORTUNITY to the public shareholders.

VOLUNTARY DELISTING
EXIT OPPORTUNITY TO PUBLIC

SHAREHOLDERS
Delists its equity shares from all recognized
stock exchanges.
After delisting does not continue to remain
listed on any recognized stock exchange
having nation-wide trading terminal.
PROCEDURE FOR DELISTING
Board Resolution
Shareholders approval by POSTAL BALLOT
Number of votes cast by public
shareholders in FAVOUR to be at least TWO times
the votes AGAINST it.
In-principle approval of the stock exchange
Make application for delisting within ONE
year of passing resolution.
Application for In-principle approval to be
disposed by SE within 30days from receipt.
Application for in-principle approval to be supported
by: Auditors report
Final Application to SE to be supported by
proof of having given the Exit opportunity
NO EXIT OPPORTUNITY TO PUBLIC

SHAREHOLDERS
After delisting if continues to
remain listed on any recognized
stock exchange having nation-wide
trading terminal
PROCEDURE FOR DELISTING
Board Resolution
Public notice in newspaper
Application to stock exchange for
delisting
Disclosure of delisting in the 1st
Annual Report of the Company
prepared subsequent to delisting
Application to be disposed by SE within 30

days from receipt.
11
VOLUNTARY DELISTING WITH NO EXIT OPPORTUNITY

TO PUBLIC SHAREHOLDERS
A company may delist its equity shares from one or more recognized stock exchanges
where they are listed and continue their listing on one or more other recognized stock
exchanges having nationwide trading terminals, then in that case, no exit opportunity
needs to be given to the public shareholders. Recognized stock exchange having nation
wide trading terminals means the Bombay Stock Exchange Limited, the National Stock
Exchange of India Limited or any other recognized stock exchange which may be
specified by the Board in this regard.
Procedure for delisting where no exit opportunity is required:
The following procedure is required to be adopted for delisting of equity shares
from one or more recognized stock exchanges, but hey continue to be listed on one or
more recognized stock exchanges and no exit opportunity is required to be given to the
public shareholders. This procedure is prescribed by Securities and Exchange Board of
India (Delisting of Equity Shares) Regulation, 2009:
The first step in this regard is that the proposed delisting is to be approved by a
resolution of the board of directors of the company in its meeting.
Then the company shall give a public notice of the proposed delisting in at least one
English national daily with wide circulation, one Hindi national daily with wide
circulation and one regional language newspaper of the region where the concerned
recognized stock exchanges are located.
12
Then company shall make an application to the concerned recognized stock

exchange for delisting its equity shares.
The fact of delisting will be disclosed in the first annual report of the company
prepared after the delisting. Source: Securities and Exchange Board of India
An application for delisting shall be disposed of by recognized stock exchange within a

period of not exceeding 30 working days from the date of receipt of such application.
Voluntary delisting from few stock exchanges subject to listing at
atleast one stock exchange can be summarized as:
13
VOLUNTARY DELISTING WITH EXIT OPPORTUNITY

TO THE PUBLIC SHAREHOLDERS
A company may delist its equity shares and if after the proposed delisting, the
equity shares does not remain listed on any recognized stock exchange having nation
wide trading terminals, then exit opportunity will be given to all the public shareholders
holding the equity shares. This is a lengthy process because the interests of the
shareholders are involved. The voluntary delisting requires the mandatory meeting of all
regulations including approval from board members, providing an exit opportunity for all
public shareholders at a price quoted by them, and in-principle approval from the stock
exchange among others.
Procedure for delisting where Exit Opportunity is required
First of all, company has to obtain the prior approval of the board of directors of
the company in its meeting;
After that, it has to obtain the prior approval of shareholders of the company by
special resolution passed through postal ballot, but special resolution shall be
acted upon only if the votes cast by public shareholders in favour are at least two
times the number of votes cast by public shareholders against it.
14
Then, company will make an application to the concerned recognized stock

exchange for in-principle approval of the proposed delisting in the form specified
by the recognized stock exchange and it will be accompanied by the Audit
Report.
Within one year of passing the special resolution, it will make the final
application to the concerned recognized stock exchange
Final application shall be made within a period of one year from the date of
passing of special resolution.
The final application for delisting shall be accompanied with the proof of giving
the exit opportunity to the public shareholders.
EXIT OPPORTUNITY
After getting in principle approval from the stock exchange, promoters will
make a public announcement in at least one English national daily with wide
circulation, one Hindi national daily with wide circulation and one regional
language newspaper of the region where the concerned stock exchange is
located.
The public announcement shall also specify a date, which is not later than
thirty working days from the date of the public announcement, for
determining the names of shareholders to whom the letter of offer shall be
sent.
The promoter shall appoint a merchant banker registered with the Board and
other intermediaries.
(Delisting
of
(Source: Securities and Exchange Board of India

Equity
Shares)
(http://www.sebi.gov.in./acts/delisting2009.pdf)
ESCROW ACCOUNT
15
Regulations,
2009
The promoter shall open an escrow account and deposit in it the total
estimated amount of consideration calculated on the basis of floor price and
number of equity shares outstanding with public shareholders.
Escrow Account will consist of cash deposited with the bank or bank
guarantee or both. (Source: Note on Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009 by Anushree Agarwal and
Payal Jain; Vinod Kothari & Company.
LETTER OF OFFER
The promoter shall dispatch the letter of offer to the public shareholders of
equity shares, not later than forty five working days from the date of the
public announcement, so as to reach them at least five working days before
the opening of the bidding period.
The letter of offer shall be accompanied with a bidding form for use of public
shareholders.
BIDDING PERIOD
The date of opening of the offer shall not be later than fifty five working days
from the date of the public announcement.
The offer shall remain open for a minimum period of three working days and
a maximum period of five working days, during which the public shareholders
may tender their bids.
RIGHT OF SHAREHOLDERS TO PARTICIPATE IN BIDDING PROCESS

All public shareholders of the equity shares which are sought to be delisted shall
be entitled to participate in the book building process except Promoters or persons
acting in concert with the promoters and holder of depository receipts unless such
16
receipt holders convert their receipts into equity shares.
Source: Securities
and Exchange Board of India (Delisting of Equity Shares)

DETERMINATION OF THE FLOOR PRICE
Floor price where equity shares are frequently traded not to be less than the
higher of the following:
average of the weekly high and low of the closing prices of the equity
shares of the company during the twenty six weeks OR
Two weeks before the date of notification of delisting proposal.
Floor price where the shares are infrequently traded to be determined by the
Promoters and Merchant Banker taking into account the following:
Highest price paid by promoter twenty six weeks before it was
notified of Board meeting upto the date of public announcement,
Return on net worth,
Book value of the shares of the company,
Earning per share.
17
PROMOTER NOT BOUND TO ACCEPT THE OFFER PRICE
Promoter is not bound to accept the equity shares at the price determined by
the Book Building Process.
If the price is not acceptable, then the promoter will not move ahead with the
delisting process.
The promoter has to ensure minimum level of public shareholding and the
public shareholding can be increased by the following ways:
By the issue of new shares by the company,
By the promoter making an offer for sale of his holdings,
By the promoter making an offer for sale of his holdings through the
secondary market in a transparent manner.
SUCCESSFUL OPEN OFFER
An offer will be considered as successful if the shareholding of the promoter

together with the shares accepted through eligible bids reaches the higher of:
90% of the total shares issued of that class.
Aggregate percentage of pre offer promoter shareholding and fifty
percent of the offer size.
Within 8 working days from the closure of offer, the promoter and the
merchant banker will make a public announcement in the newspaper
regarding the final price determined.
The promoter will open a special account with banker to issue and transfer
the payment consideration from Escrow Account.
Within 10 days from the closure of offer, the genuine shareholders will be
made final payment.
NON-SUCCESSFUL OPEN OFFER
If the offer is rejected, then the equity shares deposited by the shareholders
will be returned within 10 days of the closing of the bidding process.
No final application will be filed with the stock exchange.

18
Escrow Account will be closed.
RIGHT OF THE REMAINING SHAREHOLDERS
The remaining shareholders holding such equity shares may tender their
shares to the promoter upto the period of atleast one year from the date of
delisting.
The promoter shall pay the same final price at which the earlier acceptance of
shares was made.
After making all payments, the balance amount in the escrow account will be
transferred to the promoter.
Thus, in the case of voluntary delisting, the company voluntarily
would decide to go for delisting and remove its shares off the stock exchange. This is a
lengthy process because the interests of the shareholders are involved. The voluntary
delisting requires the mandatory meeting of all regulations including approval from board
members, providing an exit opportunity for all public shareholders at a price quoted by
them, and in-principle approval from the stock exchange among others. A company may
voluntarily choose to delist itself from the Stock Exchange due to variety of reasons such
as:
In order to save the cost and increasing its net income.
Indian Subsidiary of MNCs may delist themselves in order to escape from the
various regulation of the concerned Stock Exchange so that they can repatriate
huge profits to their parent country.
In order to evade the tax liabilities.
19
Voluntary Delisting can be summarized as:
20
VOLUNTARY DELISTING FOR SMALL COMPANIES

21
Under Securities and Exchange Board of India (Delisting of Equity Shares)

Regulation, 2009 special provisions have been provided for the small companies. These
companies need not to follow the Reverse Book Building Process.
Small Company
Small Company means a company having paid-up capital of upto one

crore and its equity shares were not traded on any exchange in the one
year immediately preceeding the date of decision of delisting OR
A company having upto 300 public shareholders and the paid-up value of
the shares held by such shareholders is upto Rs. One crore
Procedure for voluntary delisting by Small company

Board meeting and Appointment of Merchant Banker
The proposed delisting shall be approved by a resolution of the board of

directors of the company in its meeting and the promoter will appoint a
merchant banker who is registered with the Board.
Outcome of Board meeting to Stock Exchange
The outcome of the board meeting that Board of Directors has proposed to
delist the company will be sent to concerned Stock Exchange.
Special Resolution through Postal Ballot
The prior approval of shareholders of the company has to be taken by

special resolution which will be passed through postal ballot, disclosing all
material facts in the explanatory statement sent to the shareholders in
relation to such resolution.
22
The special resolution shall be acted upon only if the votes cast by public
shareholders in favour of the proposal amount to at least two times the
number of votes cast by public shareholders against it.
Determination of Exit Price
The promoters shall determine the exit price in consultation with the
Merchant Banker. The price to be offered to the public shareholders for
tendering their shares shall not be less than the exit price determined.
Application for In-Principle Approval
The company will make an application to the concerned recognized stock

exchange for in-principle approval of the proposed delisting in the form
specified by the recognized stock exchange. The application shall be
accompanied by an audit report covering a period of six months prior to
the date of the application.
In-Principle Approval by the Stock Exchange

The recognized stock exchange shall dispose off the Application of the In
Principal approval within a period not exceeding thirty working days from the date of
receipt of such application after considering the following aspects:
The resolution of investor grievances by the company;
Payment of listing fees to that recognized stock exchange;
The compliance with any condition of the listing agreement with that
recognized stock exchange having a material bearing on the interests of its
equity shareholders;
Any litigation or action pending against the company pertaining to its

activities in the securities market or any other matter having a material
bearing on the interests of its equity shareholders;
23
Any other relevant matter as the recognized stock exchange may deem fit
to verify.
Public Notice
The company will give a public notice of the proposed delisting in at least
one English national daily with wide circulation, one Hindi national daily
with wide circulation and one regional language newspaper of the region
where the concerned recognized stock exchanges are located.
Letter to all Public shareholders

The promoters shall write individually to all the public shareholders
containing the following particulars:
Intention of delisting the shares.
Exit price and justification of the exit price.
Seeking the consent of the shareholders for delisting and for dispensing
the requirement of book building process for determination of the exit
price.
Consent of the shareholders
Atleast 90% of the public shareholders shall give their consent in writing
for the delisting of the shares and the shareholders shall have the option
to surrender their shares at the exit price determined or to remain the
shareholders even after delisting.
This process has to be completed by the company within 75 days of

dispatching the letters to shareholders.
Payment to shareholders
24
The promoters shall make the payment in cash to the public shareholders
who have tendered their shares within 15 working days from the date of
expiry of 75 working days.
Final Application to Stock Exchange
A final application for delisting will be made to the concerned

recognized stock exchange accompanied with the proof of having given
the exit opportunity.
Delisting Order
(The
recognized stock exchange will dispose off the Application of the
delisting filed by the company complete in all respects and pass the
delisting order.
S
25
Process for Voluntary Delisting for Small Companies can be summarized as
26
COMPULSORY DELISTING OF EQUITY SHARES

Every company listed on a Stock Exchange has to comply with the listing requirements
imposed by the concerned Stock Exchange. These requirements may be related to
minimum sales level or regarding financial ratios etc. If the company fails to comply with
these requirements specified by the Stock Exchange, then the concerned Stock Exchange
may delist the companys stock. Thus, delisting by the Stock Exchange due to noncompliance with the listing requirements, is referred to as Compulsory Delisting.
Where a company has been compulsorily delisted then the company, its whole time
directors, its promoters and the companies which are promoted by any of them shall not
directly or indirectly access the securities market or seek listing for any equity shares for
a period of ten years from the date of such delisting.
Procedure for Compulsory Delisting for Equity Shares

Constitution of Panel: The first step in compulsory delisting by the Stock
Exchange is the constitution of a Panel. The decision regarding compulsory
delisting shall be taken by a panel to be constituted by the recognized stock
exchange. This panel will consist of:
Two directors of the recognized stock exchange (one of whom shall be a

public representative);
One representative of the investors;
One representative of the Ministry of Corporate Affairs or Registrar of

Companies; and
The Executive Director or Secretary of the recognized stock exchange.
27
Public Notice before Delisting Order: Before making a delisting order the
recognized stock exchange shall give a notice in:
one English national daily with wide circulation and
one regional language newspaper of the region where the concerned
recognized stock exchange is located and
shall also display such notice on its trading systems and website.
Time Period of making Representation: Time period of fifteen working days from
the notice is given to any person who may be aggrieved by the proposed delisting
within which he can made representations to the recognized stock exchange which
has issued a notice for the delisting.
Delisting order by the Recognized Stock Exchange
After considering the representations made by the company and any aggrieved
person, the concerned Recognized Stock Exchange will pass the Delisting
Order while considering the following aspects:
Nature and extent of the non-compliance by the company and the
number and percentage of shareholders who may be affected by such
non-compliance.
The status of compliance of the company with the office of the
concerned Registrar of Companies.
Public Notice after Delisting Order
Where the recognized stock exchange passes the delisting order, it shall,
Publish a notice in one English national daily with wide circulation
and one regional language newspaper of the region where the
concerned recognized stock exchange is located.
28
Inform all other Stock exchanges where the shares of such company
are listed about delisting.
29
Disclosure to be made in the Notice
Facts of such Delisting.
Name and Address of the company.
The fair value of the equity shares determined.
Name and Address of the promoters of the company who would be liable.
EXIT PRICE determined by an Independent Valuer
The Recognized Stock Exchange shall form a panel of expert valuers from
whom the valuer will be appointed.
The promoter of the delisted company shall acquire the equity shares from the
public shareholders at the value determined by the valuer.
30
Process for Compulsory Delisting of Equity Shares can be summarized as:
31
32
Special Powers to the Recognized Stock Exchange in case of Compulsory

Delisting
The recognized stock exchange can file prosecutions under relevant

provisions of the Securities Contracts (Regulation) Act, 1956 against
identifiable promoters and directors of the company for the alleged noncompliance.
The recognized stock exchange can also file a petition for winding up the
company under section 433 of the Companies Act, 1956 and make a request
to the Registrar of Companies to strike off the name of the company from
the register.
Comparison between Voluntary and Compulsory Delisting

S. No
1.
Criteria
Compulsory Delisting
Voluntary Delisting from all the

Exchange(s)
Applicable
Regulations 22 to 24
Regulations 5 to 21
Regulations
2.
Initiative
Any Recognized Stock Any Company can voluntarily
Action
Exchange
makes
an apply to the concerned stock
order to delist the equity exchange(s) for delisting.

shares of a company.
3.
Grounds
Delisting order can be The Company either for cost

made
on
the
non- benefit, or to comply with any of
fulfillment of the listing the rules and regulations etc may

regulations
of
the seek delisting from any of the
respective exchange and exchange.

on any other ground
prescribed in the rules
made under section 21A
of SCRA, 1956.
4.
Public Notice
Public Notice in this case Public

be
given
by
33
notice
and
all
the announcements be given by the
Exchange
5.
Approvals
Promoters of the company.
The Panel of Experts has The Company seeking voluntary

to take the decision after delisting shall take the approval of
giving
reasonable the concerned stock exchange(s)
opportunity
of
being and also of public shareholders.
heard to all the persons

who may be aggrieved
by the Delisting of the
company.
6.
7.
8.
General
No need of the General Shareholders
Meeting of the
meeting
shareholders
shareholders
Appointment
The complete process is The complete process is monitored
of Merchant
monitored by the Panel by the Merchant Bankers
Banker
of Experts
Reverse Book
No bids are invited from Complete
Building
the
process
determination
of
to
be
the passed through Postal ballot.
Shareholders
of
process
of
Reverse
for Book Building is to be completed

the for determination of the Final
Final Price
9.
resolution
the securities
Price.
The company can not relist its
The
company/
Promoters/Directors are securities for a period of 5 years.
market
debarred
Debarred from
from
the
securities market for a

period of 10 years
Relisting of delisted Equity Shares
34
Under Securities and Exchange Board of India (Delisting of Equity Shares)

Regulation, 2009 separate conditions are specified for relisting of equity shares which are
delisted.
In case of VOLUNTARY DELISTING no application can be filed for the relisting
of equity shares for a period of five years from the delisting.
In case of COMPULSORY DELISTING no application can be filed for the
relisting of equity shares for a period of ten years from the delisting.
In case of Delisting due to WINDING UP of the company relisting is not allowed
for five years.
But an application for listing of delisted equity shares can be entertained if the
recommendation is made by the Board for Industrial and Financial Reconstruction
under Sick Industrial Companies (Special Provisions) Act, 1985.
While considering an application for listing of any equity shares which had been
delisted the recognized stock exchange shall have to give special attention to the
facts and circumstances under which delisting was made.
An application for listing made in respect of delisted equity shares shall be
deemed to be an application for fresh listing of such equity shares and shall be
subject to provisions of law relating to listing of equity shares of unlisted
companies.
CHAPTER 3
Data analysis and interpretation
35
An effort has been made to find out the companies which are delisted from
Bombay Stock Exchange from 2005 to 2009 in order to find out the reasons for delisting
of such companies, to make a year-wise analysis of the companies delisted from Bombay
Stock Exchange and to calculate their Raw Return.
The following table shows the list of companies which are delisted from BSE
from 2005 to 2009 and their reason for delisting:
SERIAL NO.
REASONS FOR DELISTING

NAME OF COMPANY
1.
Voluntary Delisting
AMZEL AUTOMOTIVE LTD.
2.
Voluntary Delisting
BHARTI HEALTHCARE LTD.
3.
Voluntary Delisting
BLOSSOM INDUSTRIES LTD.
4.
Voluntary Delisting
FLEXTRONICS SOFTWARE
SYSTEMS LTD.
5.
Voluntary Delisting
HINDUSTAN POWERPLUS LTD.
6.
Voluntary Delisting
VICKERS SYSTEMS
INTERNATIONAL LTD.
7.
SEBI (Delisting of Securities

ADITYA INTERNATIONAL LTD.
8.
ALEMBIC GLASS INDUSTRIES
LTD.
9.
Guidelines) 2003
Guidelines) 2003
Voluntary Delisting
DATT MEDIPRODUCTS LTD.

10.
Voluntary Delisting
DPIL LTD.
11.
Voluntary Delisting
DSP MERRILL LYNCH LTD.
12.

ESSAR TELEHOLDINGS LTD.
13.
HARISIDDHA TRADING &
FINANCE LTD.
36
Guidelines) 2003
Voluntary Delisting
14.
Voluntary Delisting
MERVEN DRUG PRODUCTS LTD.
15.

ONDEO NALCO INDIA LTD.
16.
PANTALOON INDUSTRIES LTD.
17.
Guidelines) 2003
Guidelines) 2003
Voluntary Delisting
SAN ENGINEERING &

LOCOMOTIVE CO.LTD.
18.

APEEJAY TEA LTD.
Guidelines) 2003
19.
BALMER LAWRIE-VAN LEER LTD.
20.
EICHER LTD.
Guidelines) 2005
Guidelines) 2003
21.
ESSAR STEEL LTD.
Guidelines) 2003
22.
IGATE GLOBAL SOLUTIONS LTD.
23.
PANASONIC AVC NETWORKS LTD.
24.
SYNGENTA INDIA LTD.
25.
WARTSILA INDIA LTD.
Guidelines) 2003
Guidelines) 2003
Guidelines) 2003
Guidelines) 2003
26.
YOKOGAWA INDIA LTD.
27.
BHURUKA GASES LTD.
28.
BOSCH CHASSIS SYSTEMS INDIA
LTD.
(Source: www.bseindia.com)
37
Guidelines) 2003
Guidelines) 2005
Guidelines) 2005
Analysis:
Thus, 40 companies have been considered which are delisted from Bombay
Stock Exchange from year 2005 till 2009. Out of these 40 companies, 70% companies i.e.
28 companies are delisted by the Stock Exchange as COMPULSORY DELISTING due
to non-compliance with the clauses of listing agreement. While the rest 30% companies
i.e. 12 companies are delisted as VOLUNTARY DELISTING. Both these types of
delisting require a specific procedure as prescribed by SEBI. The procedure followed
under Compulsory Delisting is different from the procedure that is followed under
Voluntary Delisting.
38
REVERSE BOOK BULIDING

Like a book building process is used to determine an effective price for
raising funds, a reverse book building process is used to determine an exit price for delisting. Generally, when a person (seller) wants to exit, he doesn't know the intention of
buyer. Reverse book building gives the seller a right to decide the price at which he
wishes to exit, and the buyer, the option to decide whether he wants to accept or reject the
same.
The process of price discovery is undertaken as in normal book building
process, and the cut off price /final price is the one at which maximum shares are
tendered. The promoter or acquirer shall appoint trading members for placing bids on the
online electronic system.
At the end of the book building period, the merchant banker to the book
building exercise shall announce the final price and the acceptance (or not) of the price
by the promoter / acquirer. Investors may approach trading members for placing offers on
the on-line electronic system. If the acquirer accepts the price, the shares are tendered to
all those who have bid lower than that, and if the acquirer rejects the price, then the
shares are returned to the shareholders.
Thus, Reverse Book Building is basically a process used for efficient price
discovery. It is a mechanism where, during the period for which the Reverse Book
Building is open, offers are collected from the share holders at various prices, which are
above or equal to the floor price. The buy back price is determined after the offer closing
date.
39
REVERSE BOOK BULIDING SIZE OF DELISTED COMPANIES

SERIAL
NAME OF COMPANY
NO.
REVERSE BOOK
BULIDING SIZE (RS. IN
CRORES)
18,29,940
13,85,99,413
1,77,24,000
FLEXTRONICS SOFTWARE SYSTEMS LTD.
VICKERS SYSTEMS INTERNATIONAL LTD.
4,59,31,875
1,25,52,240
ALEMBIC GLASS INDUSTRIES LTD.
23,88,59,556
10
DPIL LTD.
11
12
13
HARISIDDHA TRADING & FINANCE LTD.
14
15
72,43,91,845
16
78,65,62,280
603,39,74,388
16,78,87,236
2,34,90,000
14,39,774
40
109,55,01,600
84,15,63,500
527
2,30,14,086
17
SAN ENGINEERING & LOCOMOTIVE
3,61,30,149
18
CO.LTD.
APEEJAY TEA LTD.
13,22,65,095
19
14,31,54,438
20
EICHER LTD.
42,04,20,000
21
ESSAR STEEL LTD.
559,51,47,398
22
174,93,71,547
23
12,22,10,542
24
SYNGENTA INDIA LTD.
179,17,69,034
25
WARTSILA INDIA LTD.
44,28,93,843
26
YOKOGAWA INDIA LTD.
49,83,64,975
27
BHURUKA GASES LTD.
28
BOSCH CHASSIS SYSTEMS INDIA LTD.
29
GE CAPITAL TRANSPORTATION
88,098,550
213,76,77,684
30,69,30,035
FINANCIAL SERVICES LTD.

30
GUJARAT JHM HOTELS LTD.
4,10,16,318
31
INDUSTRIAL CABLES (INDIA) LTD.
1,79,83,500
32
MATHER & PLATT PUMPS LTD.
42,75,44,116
33
PARRY AGRO INDUSTRIES LTD.
99,85,76,383
34
RAYBAN SUN OPTICS INDIA LTD.
59,12,65,428
35
SAI SERVICE STATION LTD.
23,88,67,975
41
36
TVS FINANCE AND SERVICES LTD.
8,59,19,790
37
BHORUKA STEEL & SERVICES LTD.
2,98,49,550
38
NIRYAT SAM APPARELS(INDIA) LTD.
1,03,32,000
39
MADRAS ALUMINIUM CO.LTD.
40
TUDOR INDIA LTD.
168,23,25,000
14,50,96,704
(Source: www.bseindia.com)
42
FINAL DELISTING PRICE OF DELISTED COMPANIES

Final Delisting Price is determined on the basis of Reverse Book Building
Process. Promoter is not bound to accept the equity shares at the price determined by the
Book Building Process. If the price is not acceptable, then the promoter will not move
ahead with the delisting process.
Floor Price: The method of determining Floor Price is different for: where
the shares are frequently traded and where the shares are infrequently traded.
The following table shows the Final Delisting Price and Floor Price of the
companies delisted from Bombay Stock Exchange from 2005 to 2009:
SERIAL
NAME OF COMPANY
NO.
FLOOR
FINAL
PRICE
DELISTING
105.00
PRICE
105.00
82.60
83.00
3.50
4.00
FLEXTRONICS SOFTWARE SYSTEMS
579.00
725.00
LTD.
66.00
109.00
VICKERS SYSTEMS INTERNATIONAL
85.00
184.00
LTD.
60.00
60.00
1742.00
1742.00
6.25
6.25
10
DPIL LTD.
14.00
55.00
43
11
2143.00
2143.00
12
4949.00
4990.00
13
HARISIDDHA TRADING & FINANCE
263.57
263.57
14
LTD.
75.15
150.00
15
724.90
725.00
16
330.00
375.00
17
33.00
33.00
18
CO.LTD.
APEEJAY TEA LTD.
85.70
103.00
19
46.00
70.00
20
EICHER LTD.
21
ESSAR STEEL LTD.
22
23
24
SYNGENTA INDIA LTD.
25
WARTSILA INDIA LTD.
357.00
622.00
26
YOKOGAWA INDIA LTD.
338.00
478.00
27
BHURUKA GASES LTD.
25.00
41.00
28
514.00
600.00
29
LTD.
66.80
110.00
150.00
38.00
288.90
14.16
351.80
44
265.00
48.00
410.00
30.00
750.00
30
42.00
42.00
31
10.00
10.00
32
124.64
250.00
33
1759.11
34
35
36
1950.00
82.00
140.00
189.54
220.00
20.29
25.00
37
10.00
10.00
38
10.00
10.00
39
74.77
115.00
40
TUDOR INDIA LTD.
36.00
70.00
45
NUMBER OF YEARS FOR WHICH DELISTED COMPANIES

REMAINED LISTED ON BOMBAY STOCK EXCHANGE
The following table shows the number of years for which it remained listed on Bombay
Stock Exchange:
SERIAL
NAME OF COMPANY
YEARS
NO.
1
15 years 6 months
..
11 years 1 month
FLEXTRONICS SOFTWARE SYSTEMS LTD.
5 years 3 months
VICKERS SYSTEMS INTERNATIONAL LTD.
10 years 11 months
15 years 2 months
10
DPIL LTD.
16 years 3 months
11
15 years 4 months
12
17 years 1 month
13
HARISIDDHA TRADING & FINANCE LTD.
14
15
46
16
12 years 9 months
17
12 years 10 months
18
CO.LTD.
APEEJAY TEA LTD.
19 years 11 months
19
5 years 2 months
20
EICHER LTD.
19 years 6 months
21
ESSAR STEEL LTD.
22
7 years 7 months
23
10 years 2 months
24
SYNGENTA INDIA LTD.
6 years 5 months
25
WARTSILA INDIA LTD.
17 years 11 months
26
YOKOGAWA INDIA LTD.
17 years 2 months
27
BHURUKA GASES LTD.
17 years
28
BOSCH CHASSIS SYSTEMS INDIA LTD.
18 years 10 months
29
16 years 5 months
18 years

30
31
32
33
14 years 6 months
34
16 years 9 months
47
35
36
8 years 1 month
37
21 years 3 months
38
12 years 6 months
39
19 years 3 months
40
TUDOR INDIA LTD.
14 years 8 months
(Source: Capital Line Software)
48
14 years
RAW RETURN FROM LISTING PRICE

The following table shows the Raw Return of the companies delisted from Bombay Stock
Exchange. Raw Return from Listing Price of the company is calculated as:
Delisting Price Listing Price
* 100
Listing Price
CALCULATION OF RAW RETURN FROM LISTING PRICE

SERIAL
NAME OF COMPANY
NO.
RAW RETURN FROM LISTING

PRICE (D.P.-L.P./L.P.*100)
455.55%
-60%
FLEXTRONICS SOFTWARE SYSTEMS
LTD.
VICKERS SYSTEMS
INTERNATIONAL LTD.
-16.67%
16,829%
10
DPIL LTD.
11
10,399%
12
9,697%
13
HARISIDDHA TRADING & FINANCE
14
LTD.
-10.5%
-8.33%
49
15
16
2,900%
17
22.22%
18
CO.LTD.
APEEJAY TEA LTD.
166.56%
19
20
EICHER LTD.
1,678%
21
ESSAR STEEL LTD.
2.67%
22
28.69%
23
24
SYNGENTA INDIA LTD.
371.69%
25
WARTSILA INDIA LTD.
3,041%
26
YOKOGAWA INDIA LTD.
1,197%
27
BHURUKA GASES LTD.
7.19%
28
2,995%
29
LTD.
141%
30

31
......
32
33
680%
34
-20%
35
46.67%
36
-19.35%
37
153%
38
39

-4.67%
447%
50
250%
200%
40
TUDOR INDIA LTD.
60.55%
Out of 40 companies which are delisted, Raw Return of 7 companies was

negative which are as follows:
Blossom Industries Limited
Flextronics Software Systems Limited
Aditya International Limited
DPIL Limited
Rayban Sun Optics India Limited
TVS Finance and Services Limited
Niryat Sam Apparels (India) Limited

The remaining 33 companies earned a positive raw return after delisting.
Alembic Glass Industries earned the highest Raw Return after delisting as it is 16,829%
followed by DSP Merrill Lynch Ltd. as its Raw Return is 10,399%.
Thus, the companies with negative return suffered loss on delisting whereas
the companies with positive Raw Return have gained on Delisting.
Raw Return of certain companies is not calculated because of unavailability
of data about such companies.
CHAPTER 4
SCOPE OF STUDY
51
There is a growing trend of delisting of shares from the Indian Stock

Exchanges. But, delisting doesn't necessarily mean that a company is going to go
bankrupt. Just as there are plenty of private companies that survive without the stock
market, it is possible for a company to be delisted and still be profitable. However,
delisting can make it more difficult for a company to raise money, and in this respect, it
sometimes is a first step towards bankruptcy. For example, due to delisting, the credit
rating of a company might be further downgraded which may increase its cost of capital.
Moreover, being kicked out of a Stock Exchange is as disgraceful for a
company as it is prestigious for it to be listed on it. Even if a company continues to
operate successfully after being delisted, the main problem is the trust factor. People lose
their faith in the stock. When a stock trades on the Stock Exchange, it has an aura of
reliability and accuracy in reporting financial statements. When a company's stock is
delisted, it loses its reputation.
Another problem with delisted stock is that investors who already own a stock
prior to the delisting may be forced to liquidate their positions, further depressing the
company's share price by increasing the selling supply. This lack of coverage and buying
pressure means the stock has an even steeper climb ahead to make it back on to a major
exchange.
On the face of it, the primary responsibility to track such companies lies with
the concerned stock exchange as it is the platform where the funds are raised. So it would
seem natural that it should track the companies regularly and ensure compliance with the
requirements under the listing agreement, instead of mechanically suspending and
delisting them.
But, according to the BSE,Before suspending companies which are noncompliant, we give adequate notice to the market and media (through releases and
advertisements). The existing shareholders should track these notices issued by the
exchange.
So the responsibility also lies with the investors, who need to play a proactive
role by keeping a close tab on the companies they have invested in. So, the investors
should not invest in unknown, low-priced stocks unless they understand the associated
52
riskssuspension and delisting being one of themand are willing to put up with these.
If not, they should stick to known companies that are good, running businesses and
whose stock is traded in good numbers every day.
CHAPTER 5
RESEARCH METHODOLOGY
53
RESEARCH
Means
METHODOLOG
Y
Means
To search for a knowledge
Way of conducting a research.
So, Research Methodology involves way of conducting the research in order to solve a
problem through collecting the data. Data to be collected may be as primary data or
secondary data.
Primary Data It is considered to be the first hand information which is generally
collected from various sources such as
Interview (direct or indirect),
Surveys
Questionnaires
Experiments etc.
Secondary Data- It is considered to be the second hand information which is generally
collected from various sources such as
Internet,
Journals,
Magazines,
Print media etc.
Thus in this I have used secondary data for the purpose of collecting the data on how a
money market generally effects the banking industries.
This project is based on the information available from secondary sources. The required
information has been derived from the latest Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009, various books, articles from newspapers
on Delisting of Equity Shares and from various websites which provide the requisite
information.
CHAPTER 6
OBJECTIVES OF STUDY
54
To understand the mechanism of Delisting of Equity Shares with special reference

to Compulsory Delisting and Voluntary Delisting.
To analyze the evolution of Delisting of Equity Shares in India.
To analyze the present status of Delisting of Equity Shares in India with special
reference to Securities and Exchange Board of India (Delisting of Equity Shares)
Regulation, 2009.
To study the reasons for delisting of the companies.
To study the impacts of delisting of Equity Shares i.e. whether it is a boon or bane.
PERIOD OF STUDY
The period chosen for the study is 2005-2009. Companies which
are delisted from Bombay Stock Exchange from 2005 to 2009 are taken into
consideration to study their reasons for delisting and for calculating their Raw Returns.
55
CHAPTER 7
CONCLUSION
Sometimes, it is argued that delisting is too harsh because it punishes stocks
that could still recover. However, allowing such companies to stay listed would result in
the major exchanges simply diluting the caliber of the companies that trade on them and
degrading the respectability of the companies that maintain the listing requirements.
But, from the shareholders point of view, this is the gravest situation.
Here, the shareholders of the Companies are left in a lurch, without getting any money
back for their investments in such companies. Although, as per the Delisting Guidelines,
there are provision for payment of fair value to the public shareholders, but no control
mechanism has ever been deployed to keep a check on such payments.
But from the Regulators (the Exchanges, SEBI etc.) point of view, such
delistings are important because this cleans up the system and relieves them of the dead
woodstock. Thus, delisting becomes imperative to relieve the system of the unwanted
trash companies. Thus, a complete ban on delisting is not possible. A judicious mix of
listings and delistings has to be there in the system, to make it run smoothly.
Although the Regulation prescribes various guidelines for compulsory and
voluntary delisting of companies but, it does not mention the penalties/ consequences in
case of defaulting promoters in making the payment of the fixed fair value to the public
shareholders. So, the Regulators should be very cautious of the procedures followed,
opportunities provided to the public shareholders and its overall impact on the investor
confidence as a whole.
But, the new set of delisting provisions i.e. Securities and Exchange Board of
India (Delisting of Equity Shares) Regulation, 2009 have come to strengthen the interest
of public shareholders, while simultaneously facilitating the promoters objective to have
greater control and flexibility of operations
56
To sum up, while allowing delistings, a complete check and control

mechanism needs to be implemented for achieving the very objective of INVESTORS
PROTECTION.
57
BIBLIOGRAPHY
BOOKS
Dr. K.R. Chandratre Compendium on Securities and Exchange Board of India
Capital Issues and Listing; Bharat Publishing House, New Delhi.
MY Khan Indian Financial System; Tata Mc Graw Hill Publishing Company
Limited, New Delhi.
JOURNALS AND MAGAZINES

Chandy PR, Sarkar, Salil K and Tripathy Niranjan; Empirical Evidence on the
Effects of Delisting from National Market System Journal of Economics and
Finance, Spring 2004.
Nirav Pankaj Shah; Delisting of Securities Business Law Magazine; March
2010.
Anand Adhikari; The Delisting Blues Business Today Magazine; August 10,
2007.
SECURITIES AND EXCHANGE BOARD OF INDIA REGULATIONS

Securities and Exchange Board of India (Delisting of Equity Shares) Regulations,
2009; The Gazette of India, Extraordinary PART 3 SECTION-4 Securities and
Exchange
Board
of
India
Notification,
Mumbai,
June
10,
2009.
(http://www.sebi.gov.in./acts/delisting2009.pdf)
ARTICLES IN NEWSPAPERS
ECONOMIC TIMES
http://economictimes.indiatimes.com/features/financialtimes/delistingofshares/arti
cleshow/2661671.cms Delisting of Shares dated December 30, 2007.
FINANCIAL EXPRESS
http://www.financialexpress.com/news/sebinotifiesdelistingnorms/475064 SEBI
notifies Delisting Norms dated June 12, 2009.
58
BUSINESS STANDARD
http://www.business-standard.com/india/news/sebi-to-announce-new-delistingguidelines/61650/on SEBI to announce New Delisting Guidelines dated May
14, 2009.
BUSINESS STANDARD
http://www.business-standard.com/india/news/sebi-delisting-regulations2009/361966/ SEBI Delisting Regulations, 2009 dated June 24, 2009
WEBSITES VISITED
www.delistedshares.co.in
http://www.sebi.gov.in/commreport/delistreport.pdf;
Report
of
Delisting
Committee on Delisting of Shares PART 1

http://indianprofits.com
http://india-financing.com; Note on Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009 by Anushree Agarwal and Payal
Jain; Vinod Kothari & Company.
http://www.rediif.com/money/2002/sep/17tut.htm
http://www.e-investing.in
www.thehindubusinessline.com
http://www.legalserviceindia.com/article/1329/listing-&-delisting-ofsecurities.html
http://www.advisoranalyst.com/glablog/2010/04/09 Indias Focus on Investors
Protection
http://www.indiancorporatelaw.blogspot.com/2009/06/sebi-notifies-delistingregulations.html
www.sebi.gov.in http://www.investopedia.com/articles/stocks/07/delisting.asp
www.bseindia.com
59

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Delisting is totally the reverse of listing. Delisting means removal of securities of

EVOLUTION OF DELISTING IN INDIA

The salient features of Guidelines issued in 2003 were:

REASONS FOR DELISTING

3. Relaxation of Regulations: Sometimes, companies go in for delisting in order to

DELISTING: BOON OR A BANE

On a comparison of all the above situations, it can be said that if the

VOLUNTARY DELISTING OF EQUITY SHARES

Voluntary Delisting with NO EXIT OPPORTUNITY to the public shareholders.

Voluntary Delisting with EXIT OPPORTUNITY to the public shareholders.

EXIT OPPORTUNITY TO PUBLIC

NO EXIT OPPORTUNITY TO PUBLIC

Application to be disposed by SE within 30

VOLUNTARY DELISTING WITH NO EXIT OPPORTUNITY

Then company shall make an application to the concerned recognized stock

An application for delisting shall be disposed of by recognized stock exchange within a

VOLUNTARY DELISTING WITH EXIT OPPORTUNITY

Then, company will make an application to the concerned recognized stock

(Source: Securities and Exchange Board of India

RIGHT OF SHAREHOLDERS TO PARTICIPATE IN BIDDING PROCESS

receipt holders convert their receipts into equity shares.

and Exchange Board of India (Delisting of Equity Shares)

PROMOTER NOT BOUND TO ACCEPT THE OFFER PRICE

SUCCESSFUL OPEN OFFER

An offer will be considered as successful if the shareholding of the promoter

NON-SUCCESSFUL OPEN OFFER

No final application will be filed with the stock exchange.

Escrow Account will be closed.

RIGHT OF THE REMAINING SHAREHOLDERS

In order to save the cost and increasing its net income.

In order to evade the tax liabilities.

Voluntary Delisting can be summarized as:

VOLUNTARY DELISTING FOR SMALL COMPANIES

Under Securities and Exchange Board of India (Delisting of Equity Shares)

Small Company means a company having paid-up capital of upto one

Procedure for voluntary delisting by Small company

The proposed delisting shall be approved by a resolution of the board of

Special Resolution through Postal Ballot

The prior approval of shareholders of the company has to be taken by

Determination of Exit Price

Application for In-Principle Approval

The company will make an application to the concerned recognized stock

In-Principle Approval by the Stock Exchange

The resolution of investor grievances by the company;

Payment of listing fees to that recognized stock exchange;

Any litigation or action pending against the company pertaining to its

Letter to all Public shareholders

Intention of delisting the shares.

Exit price and justification of the exit price.

Consent of the shareholders

This process has to be completed by the company within 75 days of

Final Application to Stock Exchange

A final application for delisting will be made to the concerned

recognized stock exchange will dispose off the Application of the

Process for Voluntary Delisting for Small Companies can be summarized as

COMPULSORY DELISTING OF EQUITY SHARES

Procedure for Compulsory Delisting for Equity Shares

Two directors of the recognized stock exchange (one of whom shall be a

One representative of the investors;

One representative of the Ministry of Corporate Affairs or Registrar of