SEBI has updated its delisting rules to include a new fixed price mechanism, making it easier for company owners to take their businesses private. This method ensures that public shareholders are offered a price that’s at least 15% higher than the fair market value.
Starting September 25, any delisting offer using this fixed price method must exceed the floor price by at least 15%. The floor price is calculated based on the highest acquisition price paid in the last 26 weeks or other valuation methods like the volume-weighted average price.
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SEBI has also defined specific floor price rules for the Reverse Book Building (RBB) and fixed price methods, ensuring that offers reflect true market values and protect shareholders.
The traditional RBB process was often too rigid, making it difficult for promoters to meet the required delisting price. The new rules aim to simplify this, making the process more feasible.
Although the new rules are effective immediately, companies have two months to submit delisting offers under the old regulations. SEBI has also lowered the required approval rate for a successful counter-offer under the RBB from 90% to 75% of public shareholders.
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For holding companies (holdcos) looking to delist, SEBI mandates that at least 75% of their value must come from direct stakes in other listed companies, verified by two independent valuations. Once delisted, these companies cannot re-list for at least three years.
