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PHDCCI wants SEBI to set up panel to examine, approve delisting cases

Richa Mishra

New Delhi , May 6

TO make the delisting procedure smooth for all the stakeholders - the stock exchanges, the companies and the investors - the PHD Chamber of Commerce and Industry (PHDCCI) has urged the the Securities and Exchange Board of India to consider constituting a panel to examine and approve such cases.

The draft SEBI (Delisting of Securities) Regulations, 2004, proposes that no company shall apply for and no stock exchange shall grant delisting of any class of securities of a company, unless a period of three years has elapsed since the listing of that class of securities on any exchange.

According to PHDCCI officials, "There may be circumstances where a company may want to delist before the stipulated period of three years. In such cases, if all the shareholders of a company agree, the period of three years may be further reduced.

Therefore, a panel may be constituted which can examine and give approval on a case to case basis."

The chamber, while submitting its views to the market regulator on the draft proposals, has also sought clarity on certain regulations, a PHDCCI official told Business Line.

On issue of price formula, PHDCCI held that in case of companies having paid-up capital up to Rs 3 crore, the pricing formula given under the SEBI Takeover Code may be prescribed.

To ensure that only companies serious about delisting come for taking approval, the regulations should provide that 10 per cent of the estimated amount of consideration calculated on the prescribed basis will be paid into the escrow account at the time of passing the special resolution and balance 90 per cent may be deposited at the time of offer.

In case the company passes a special resolution but does not delist later, the 10 per cent contribution may be forfeited and transferred to Investors' Education and Protection Fund, it suggested.

In the interest of investors, in the case of compulsory delisting of the company by the SE, the chamber said that before actually delisting a company, the SE concerned should be required to intimate the Central Listing Authority (CLA) about its decision. The CLA should give its approval on the matter within 30 days. After receiving intimation from CLA, the SE may delist the company.

Regulation 25 provides for exemption from following the book building process of a promoter or acquirer of a company having 50 or less number of holders of securities.

The chamber suggested that instead of providing exemption to only those companies having 50 or less number of holders of securities, a limit of 500 security holders may be provided.

Alternatively, a formula may be worked out which takes into account not only the number of security holders but also the number of securities and total amount in terms of valuation of shares.

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