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Introduction

Voluntary delisting means delisting of equity share of a company voluntarily on the application of the company. Provisions related to voluntary delisting are covered under SEBI (Delisting of Equity Shares) Regulations, 2009. Regulation 5 – 21 of the aforementioned regulations deal with voluntary delisting.

Subject to provisions of these regulations, a company may delist its equity shares from all the recognized stock exchange where they are listed but after providing the exit opportunity to the public shareholders if that stock exchange has nationwide trading terminals like NSE and BSE.

If the equity shares remain listed on any recognized stock exchange but delist from other stock exchange like Calcutta stock exchange than there is no requirement of giving an exit opportunity.

Delisting from all the stock exchange

A company may delist its equity shares from all the recognized stock exchange where they are listed, exit opportunity must be given to all public shareholders. Giving an exit opportunity is a mandatory requirement under this case. Once delisted, the share will not be traded on any stock exchange and the shareholders will not be able to sell their shares. Thus, an opportunity is required to be given to shareholders to sell off their shares.

Procedure for delisting where exit opportunity is required

The process of Voluntary Delisting with an exit opportunity is broadly covered under the following five steps:

The step-wise process of Voluntary Delisting with an exit opportunity is as follows:

1. Promoters shall appoint a merchant banker for delisting of its securities.
2. Obtain prior approval of the board of directors of the company in its meeting. The board shall certify that all legal compliances are duly made by the company till date.
3. Obtain prior approval of shareholders of the company by special resolution postal ballot. Also, the company shall file form MGT-14 with ROC as required under the Companies Act, 2013 and rules made thereunder.
4. File application to the concerned stock exchange to obtain in-principle approval for delisting with the audit report of Demat accounts of shareholders of the previous six months.
5. The stock exchange gives in-principle approval within 5 working days of receipt of application provided all the documents are provided by the company. In case of any discrepancy, the stock exchange may ask for completion of documents and additional information.
6. Merchant banker drafts the public announcement and letter of offer.
7. Promoters shall open an escrow account and promoter shall deposit the 100% amount on the basis of estimates or on the basis of floor price a day before the public announcement. (Floor price means the price which should not be less than the fair value of the share).
8. Within 1 working day after the in-principle approval, a public announcement will be issued in the newspapers for reverse book building.
9. Within 1 working day of the date of the public announcement, the specified list of members will be decided to whom the letter of offer will be sent.
10. Promoters shall dispatch the letter of offer to all the public shareholders within maximum 2 working days of the date of public announcement in a newspaper.
11. Now the reverse book building will be open for the maximum for 7 working days.
12. After the date of the closing of offer, the final price shall be decided by the promoters in consultation with the merchant banker. The success of the offer depends on the percentage of public shareholders agreeing to give their shares on the final price.
13. All the bids at or below the final price are successful and above that price will be unsuccessful. Promoters have the option to accept or refuse such final price. 90% of the bids should be equal or below the final price so as to make the offer successful. Else, the offer shall be unsuccessful and delisting of the shares shall not be done.
14. Now the promoters shall open a special account immediately with a SEBI registered bank to issue and transfer the entire amount of the escrow account and also the additional amount which is necessary to pay off the shareholders.
15. All the shareholders whose equity shares are verified to be genuine shall be paid the final price.
16. the promoters have to make the final application to the stock exchange within 1 year from the passing of the special resolution in step 2.
17. After the closure of offer: Within 5 working days of closure of offer, the promoters and the merchant banker shall make a public announcement in newspapers regarding:

• The success of the offer along with the final price accepted by the acquirer.
• The failure of the offer if the bids of 90% of the public shareholders are not below or equal to the final price.
• Rejection of final price by the promoters.

Delisting from any of stock exchange

If equity shares remain listed on any recognized stock exchange but delist from other stock exchange like Calcutta stock exchange than there is no requirement of giving exit opportunity.

In this option, if after the proposed delisting from any one or more recognized stock exchanges, the equity shares still remain listed on any recognized stock exchange which has nation-wide trading terminals, no exit opportunity needs to be given to the public shareholders. The procedure for such delisting of shares can be through a board resolution, public notice and application to the concerned exchange.

Procedure for delisting where no exit opportunity is required

As per regulation 7, the following steps must be followed:

1. Approval of the board of directors of the company in its meeting.
2. Company shall give public notice in three newspapers i.e. Hindi, English and regional where the stock exchange is located.
3. Make an application to the concerned stock exchange for delisting of its equity shares.
4. The facts of delisting shall be disclosed in the first annual report after delisting.