Sebi Chairperson Madhabi Puri Buch said on Monday said that the markets regulator will consider permitting the delisting of companies via fixed price instead of the reverse book-building procedure. The Securities and Exchange Board of India will issue a discussion paper on the subject by December, the regulator said.
In the reverse book-building process it is a mechanism provided for capturing the sell orders on online basis from the share holders through respective Book Running Lead Managers (BRLMs) which can be used by companies intending to delist its shares through buy back process. In the Reverse Book Building scenario, the Acquirer/Company offers to buy back shares from the share holders. The 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.
NSE uses the reverse book building system; a fully automated screen based bidding system that allows offers to run in several issues concurrently. The system has the facility of defining a hierarchy amongst the users of the system. The Book Running Lead Manager can define who will be the Syndicate member and who will be the other members participating in the issue. The Syndicate Member and other Members also have a facility of defining a hierarchy among the users of the system as Corporate Manager, Branch Manager and Dealer.
A delisting price is then computed based on these offers.
Business process for delisting through book building is as follows:
The acquirer shall appoint designated Book Running Lead Manager (BRLM) for accepting offers from the share holders.
The company/acquirer intending to delist its shares through Book Building process is identified by way of a symbol assigned to it by BRLM.
Orders for the offer shall be placed by the share holders only through the designated trading members, duly approved by the Exchange.
The designated trading members shall ensure that the security / share holders deposit the securities offered with the trading members prior to placement of an order.
The offer shall be open for ‘n’ number of days.
The BRLM shall intimate the final acceptance price and provide the valid accepted order file to the National Securities Clearing Corporation Limited (A wholly owned subsidiary of NSE carrying out clearing and responsible for settlement operations.)
The market regulator is now considering permitting a promoter to place a delisting offer at a fixed price for shareholders to consider.
Separately, SEBI also intends to strengthen rules for corporate disclosures related to insider trading regulations.
Commenting on a pending decision on a revamp of mutual fund fee structures, Buch said that feedback from the industry is under review.
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Updated: 24 Jul 2023, 06:10 PM IST