SEBI on 23rd August, 2023 has issued the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2023. The amendment apply to the voluntary delisting of non-convertible debt securities or non-convertible redeemable preference shares from stock exchanges. However, there are exceptions to this applicability. These exceptions include cases where:
- A listed entity has outstanding non-convertible debt securities or preference shares issued through a public issue.
- A listed entity has over two-hundred security holders (excluding qualified institutional buyers) for a specific set of securities.
- Delisting occurs as a result of penalties or actions initiated against the listed entity.
- Delisting happens due to the redemption of the securities.
- Delisting is carried out pursuant to a resolution plan under Section 31 of the Insolvency Code.
In-Principle Approval Process
The process of voluntary delisting begins with the listed entity making an application to the relevant stock exchange(s) seeking in-principle approval. This application should be submitted within fifteen working days from the date of passing the board resolution or receipt of necessary regulatory approvals. The stock exchange(s) must dispose of this application within a maximum of fifteen working days from the date of receiving a complete application.
Obligations of the Listed Entity
Throughout the delisting process, the listed entity has several obligations, including:
- Initiating the approval process from security holders within three working days of receiving in-principle approval.
- Disclosing all events related to the delisting proposal, from board deliberations to the completion of delisting.
- Providing comprehensive information on its website and to the stock exchanges, including reasons for delisting, proposed timetable, and more.
- Ensuring adequacy of security cover in case of secured non-convertible debt securities.
- Not engaging in any discriminatory arrangements with investors or related parties.
- Notice of Delisting
- Obtain approval from all security holders and a No-Objection Letter from the debenture trustee (if applicable) within fifteen working days from the date of the delisting notice.