SEBI Board Meeting: Delisting Relaxations For Government Firms, Relief For Startup Founders Likely

The Securities and Exchange Board of India is set to have its board meeting on June 18, with several essential reforms slated to be discussed. These include ease in delisting norms for public sector undertakings with low public float, relaxation measures for startup founders, norms for REITs and InvITs to be treated as equity and more, people in the know told NDTV Profit. 

In a proposal dated May 6, the markets regulator suggested a special framework to make it easier for the government to delist PSUs from the stock market when the government already owns at least 90% of the company. This move is for PSUs that are no longer viable due to outdated business models or other government decisions, such as asset sales.

Currently, for any company to delist from the stock market, the rules require the promoter to buy back shares from the public at a price determined using several valuation methods. One of these methods involves calculating the average share price over the past 60 trading days. 

But in the case of PSUs, which often trade at high prices because they're backed by the government, this can push the buyback price higher than the company's actual worth. That makes delisting more expensive for the government.

To fix this, SEBI has proposed a separate process just for PSUs. Only PSUs where the government and other public-sector promoters already hold 90% or more of the total shares would qualify. 

These companies would not need to meet the minimum public shareholding rule before delisting. They would also be allowed to exit the market at a fixed price — this price would still be at least 15% higher than the calculated floor price. However, as a relief, it wouldn't need to follow the full reverse book-building process.

The board is also expected to discuss treating Real Estate Investment Trusts and Infrastructure Investment Trusts as equity instruments for the purpose of index inclusion. Furthermore, mutual funds may be allowed to increase their exposure to REITs and InvITs through equity schemes up to 20%. In addition, SEBI may ease compliance norms for these investment vehicles.

Another proposal up for discussion is the ease of norms for founders of startups who wish to list their companies. Current norms only allow employees to take the benefits of ESOP issuances. The regulator is likely to discuss if the issuances can be extended to founders as well.

The meeting may also take up a proposal to simplify the qualified institutional placement process, reducing paperwork and streamlining fundraising by listed companies.

The board may also decide on a settlement scheme for commodity brokers connected to the NSEL case and deliberate on a mechanism for voluntary delisting of public sector undertakings.