25% public participation in delisting is tough, say experts

Our Bureau Mumbai | Updated on November 25, 2017

Market experts have welcomed the SEBI norms on insider trading, listing and delisting announced on Wednesday.

Vivek Mehra, leader M&A Tax, PwC, said: “Simplification of delisting guidelines is a welcome move. However, a few amendments need re-consideration, e.g. “participation” of at least 25 per cent in the number of public shareholders in delisting offer. This amendment will be impractical since in most listed companies, the number of non-institutional public shareholder is very large while the aggregate shareholding percentage is very low. Due to non-traceability and lack of interest, it will be difficult to meet the norm.” The new regulations provide that the price at which the promoter holding (including public holding who have tendered their shares) reaches 90 per cent should be taken as “offer price”. This is a welcome move as it will reduce the influence of large institutional shareholders.

SEBI has also proposed to initiate a public consultation paper for re-classification of promoters as public and imposing restrictions on wilful defaulters, which are welcome. Specially, imposing restrictions on listed entity on account of wilful default hurts public shareholders more than the promoter, and hence, it is important that proper discretion is adopted by SEBI, he said.

Arun Kejriwal, Founder, KRIS Research, said, “The intention of tightening insider trading norms is welcome. But the measures proposed give a feeling that the regulator is passing the responsibility to the bystander to prove that he is not guilty.”

Published on November 20, 2014

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