(1) A recognised stock exchange may, by order, delist any equity shares of a company on any ground prescribed in the rules made under section 21A of the Securities Contracts (Regulation) Act, 1956 (42 of 1956): Provided that no order shall be made under this sub regulation unless the company concerned has been given a reasonable opportunity of being heard.
(2) The decision regarding compulsory delisting shall be taken by a panel to be constituted by the recognised stock exchange consisting of – (a) two directors of the recognised stock exchange (one of whom shall be a public representative);
(b) one representative of the investors;
(c) one representative of the Ministry of Corporate Affairs or Registrar of Companies; and
(d) the Executive Director or Secretary of the recognised stock exchange.
(3) Before 70[passing] an order under sub-regulation (1), the recognised stock exchange shall give a notice in one English national daily with wide circulation and one regional language newspaper of the region where the concerned recognised stock exchange is located, of the proposed delisting, giving a time period of not less than fifteen working days from the notice, within which representations may be made to the recognised stock exchange by any person who may be aggrieved by the proposed delisting and shall also display such notice on its trading systems and website.
(4) The recognised stock exchange shall while passing any order under sub-regulation (1), consider the representations, if any, made by the company as also any representations received in response to the notice given under sub regulation (3) and shall comply with the criteria specified in Schedule III.
70 Substituted for the word “making” by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018.
20
(5) The provisions of Chapter IV shall not be applicable to a compulsory delisting made by a recognised stock exchange under this Chapter.
(6) Where the recognised stock exchange passes an order under subregulation (1), it shall, -
(a) forthwith publish a notice in one English national daily with wide circulation and one regional language newspaper of the region where the concerned recognised stock exchange is located, of the fact of such delisting, disclosing therein the name and address of the company, the fair value of the delisted equity shares determined under sub-regulation (1) of regulation 23 and the names and addresses of the promoters of the company who would be liable under sub-regulation
(3) of regulation 23; and
(b) inform all other stock exchanges where the equity shares of the company are listed, about such delisting 71[***].
Rights of public shareholders in case of a compulsory delisting
23. 72[(1)] The recognised stock exchange shall form a panel of expert valuers from whom the valuer or valuers shall be appointed for purposes of 73[sub-regulation (2)].
74[2] Where equity shares of a company are delisted by a recognised stock exchange under this Chapter, the recognised stock exchange shall appoint an independent valuer or valuers who shall determine the fair value of the delisted equity shares.
(3)The promoter of the company shall acquire delisted equity shares from the public shareholders by paying them the value determined by the valuer 75[within three months of the date of delisting from the recognised stock exchange], subject to their option of retaining their shares. Explanation: For the purposes of sub-regulation (1), -
(a) ‘valuer’ means a chartered accountant within the meaning of clause (b) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949), who has undergone peer review as specified by the Institute of 71 Words “and the surrounding circumstances” omitted by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018.
72 Renumbered ibid.
73 Substituted for the words and figure “sub-regulation (1)” by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018.
74 Renumbered ibid.
75 Inserted by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f. 14.11.2018.
21 Chartered Accountants of India constituted under that Act, or a merchant banker appointed to determine the value of the delisted equity shares;
(b) value of the delisted equity shares shall be determined by the valuer having regard to the factors mentioned in regulation 15.
Consequences of compulsory delisting
24. 76[(1)]Where a company has been compulsorily delisted under this Chapter, the company, its whole time directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly access the securities market or seek listing for any equity shares for a period of ten years from the date of such delisting.
77[(2) In case of such companies whose fair value is positive -
(a) such a company and the depositories shall not effect transfer, by way of sale, pledge, etc., of any of the equity shares held by the promoters/ promoter group and the corporate benefits like dividend, rights, bonus shares, split, etc. shall be frozen for all the equity shares held by the promoters/ promoter group, till the promoters of such company provide an exit option to the public shareholders in compliance with sub-regulation (3) of regulation 23, as certified by the concerned recognized stock exchange;
(b) the promoters and whole-time directors of the compulsorily delisted company shall also not be eligible to become directors of any listed company till the exit option as stated in clause (a) above is provided.]
CHAPTER VI POWERS OF THE BOARD Power of the Board to issue clarifications
25. In order to remove any difficulties in the application or interpretation of these regulations, the Board may issue clarifications and guidelines 78[from time to time].
76 Numbered by the SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2018, w.e.f.
14.11.2018.
77 Inserted ibid.
22 79[Power to relax strict enforcement of the regulations.