SEBI Allows Delisting Relaxations For PSUs Through Fixed Price Process

The Securities and Exchange Board of India on Wednesday eased delisting norms for public sector undertakings with low public float.

The board approved amendment to SEBI (Delisting of Equity Shares) Regulations, 2021 for introduction of a special measure for PSUs other than banks, non-banking financial companies and insurance companies to undertake voluntary delisting through fixed price delisting process when the shareholding of Government of India as a promoter or other PSUs equals or exceeds 90%.

Such measures include relaxations from the requirement of a two-third threshold for approving delisting by public shareholders and in the mode of computation of floor price.

"In certain PSUs with minimal public float, the shares are traded frequently at prices which are not commensurate with operations, net worth, profitability and other financial parameters of the company. If such PSUs are to undertake delisting, the current norm of 60 days' volume-weighted average market price makes it financially burdensome to delist such companies," the SEBI said.

Delisting of such eligible PSUs would be only through a fixed price delisting process, which shall be at least 15% premium over the floor price.

If an eligible PSU voluntarily delists and then strikes off within 30 days after one year from the delisting date, any money owed to public shareholders who haven't sold their shares within that one-year period will be moved to a special account at the designated stock exchange. Investors will then have seven years to claim this money from the exchange.

SEBI Chairman Tuhin Kanta Pandey said in some PSUs, the government shareholding is over 90% due to legacy reasons. "These may be required to be delisted and we are now allowing special measures for such PSUs," he said.