DELISTING
OF SECURITIES - ECONOMY
News:
Why SEBI is reviewing
delisting norms, and may choose the ‘fixed price’ method
What's
in the 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.
Key
takeaways:
● 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.
Delisting
of Securities:
● 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.
● If
a company wants to delist its securities, it needs to buy back 90% of the total issued shares.
Types
of Delisting:
Delisting can be either voluntary or compulsory.
Voluntary
Delisting:
● In
voluntary delisting, a company decides
on its own to remove its securities from a stock exchange.
Compulsory
Delisting:
● 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.
Reverse
book-building:
● 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.