PHD seeks relaxation of SEBI's delisting guidelines

New Delhi, Jan 15 (UNI) Securities and Exchange Board of India (SEBI) should relax its delisting guidelines to enable the companies to go for voluntary delisting of shares whose shareholding is not widespread and have not traded in stock exchanges for several years, an industry chamber today said.

In a letter to SEBI Chairman M Damodaran, industry chamber PHD Chamber President L K Malhotra said there are companies whose shareholding is not widespread and these companies have received the consent of all shareholders for delisting. However, the procedure for delisting is cumbersome and dilatory.

SEBI's (Delisting of Securities) Guidelines 2003 such as appointment of a merchant banker, making public announcement and determining the exit price or providing an exit option, create avoidable delays and hardship to such companies.

Besides, there are several companies whose securities have not been traded on the stock exchanges for a number of years, either because the stock exchanges were non-functional or the shares were not held by the public at large.

He said in many cases, voluntary delisting becomes necessary but difficult when the securities are listed on regional stock exchanges, but most of the stock exchanges have not been functional for many years. In such cases, the promoters and shareholders do not find it beneficial to continue to be listed on the stock exchanges and prefer delisting instead.

The SEBI guidelines permit the promoter of a company, a person who desires to get the securities of a company delisted, to seek the same from all or some of the stock exchanges after complying with the prescribed conditions.

However, in cases where all shareholders have given written consent in favour of delisting and where no other public interest is involved, complying with such cumbersome conditions impose unnecessary burden and cause undue hardship to such companies seeking delisting. Hence, these requirements should be done away with.

UNI SG PDT RS2012