Delisting provisions introduced vide SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2021

Securities and Exchange Board of India has notified the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2021 which amends the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Key amendment:

New Regulation 5A- Delisting offer:

• An acquirer may seek the delisting of the target company by making a delisting offer under following conditions:

(a) That the acquirer shall have declared his intention to so delist the target company at the time of making such public announcement of an open offer as well as at the time of making the detailed public statement.

(b) The declaration of the intent to so delist shall be made initially only in the detailed public statement.

• The delisting offer obligations shall be fulfilled by the acquirer by making the public announcement, the detailed public statement and the letter of offer shall mention the open offer price determined in accordance with regulation 8 of these regulations and the indicative price for delisting. The open offer price and indicative price shall be notified by the acquirer at the time of making the detailed public statement and in the letter of offer.
• In cases where a delisting offer is not successful due to the following reasons:

(a) on account of the non–receipt of the prior approval of shareholders in terms of regulation 11 of the Delisting Regulations; or

(b) on account of non-receipt of the prior in-principle approval of the relevant stock exchange in terms of regulation 12 of the Delisting Regulations; or

(c) the threshold as specified under Regulation 21 of the Delisting Regulations is not achieved;

In such cases, the acquirer shall, within two working days in respect of such failure, make an announcement in all the newspapers in which the detailed public statement was made and comply with all the applicable provisions of these regulations in relation to completing of the open offer.

• In cases where a competing offer is made in terms of sub-regulation (1) of regulation 20 of these regulations:

(a) the acquirer shall not be entitled to delist the target company

(b) the acquirer shall not be liable to pay interest to the shareholders on account of delay due to the competing offer

(c) the acquirer shall comply with all the applicable provisions of these regulations and make an announcement in this regard, within two working days from the date of public announcement made, in all the newspapers where the detailed public statement was made.

• The shareholders who have tendered shares in acceptance of the offer made, shall be entitled to withdraw such shares tendered, within five working days from the date of the announcement.
• In cases where the target company fails to get delisted pursuant to a delisting offer but which results in the shareholding of the acquirer exceeding the maximum permissible non-public shareholding threshold:
• the acquirer may undertake a further attempt to delist the target company during the period of twelve months from the date of completion of the open offer, subject to the acquirer continuing to exceed the maximum permissible non-public shareholding in the target company.
• such further delisting attempt shall be successful subject to the following conditions:

1. 1. the delisting threshold as provided under regulation 21 of the Delisting Regulations is met
   2. fifty percent of the residual public shareholding is acquired.

• upon failure of the further delisting attempt, the acquirer shall ensure compliance of the minimum public shareholding requirement of the target company under the Securities Contract (Regulation) Rules, 1957 with 12 months.
• the floor price for a further delisting attempt as referred shall be higher of the following:

1. 1. the indicative price offered under the first delisting attempt.
   2. the floor price determined under the Delisting Regulations as on the relevant date of the subsequent attempt.

• the book value of the company as computed based on the method stated in explanation to clause (a) under sub-regulation.
• While undertaking delisting for the first or subsequent attempt, all the provisions of the Delisting Regulations shall mutatis-mutandis be applicable, save as otherwise provided in this regulation.

*Tanvi Singh, Editorial Assistant has reported this brief.