Invest in India's Top Unlisted Companies Before They Go Public! 🚀
SEBI Guideline
Key Provisions Under SEBI
Guidelines
Updated on : May 5th, 2025
The Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003 were established to regulate the delisting (removal) of securities of companies from stock exchanges in India. These guidelines were aimed at protecting investors’ interests and ensuring transparency and fairness in the delisting process.
Here are the key features and provisions of the SEBI (Delisting of Securities) Guidelines, 2003:
Objective
Users are responsible for any third-party data shared via the Innomax website and affirm their rights to communicate such data, thereby relieving Innomax of any associated liability.
Scope
The guidelines applied to both equity and non-equity securities listed on any recognized stock exchange in India.
Types of Delisting
- Voluntary Delisting: Initiated by the company or promoters.
- Compulsory Delisting: Initiated by the stock exchange due to violations or non-compliance by the company.
Key Provisions for Voluntary Delisting
- Requires approval from shareholders through a special resolution.
- Exit opportunity must be provided to public shareholders, except in cases of delisting from all exchanges where securities remain listed on at least one nationwide stock exchange.
- Reverse book building (RBB) process used for price discovery:
- Promoters announce a floor price, and public shareholders can bid a price at which they are willing to sell.
- The final price is determined based on the highest price at which the promoter can acquire the required number of shares.
- Minimum acceptance level: Delisting is successful only if the promoter shareholding crosses a specified threshold (usually 90%) after the RBB.
Key Provisions for Compulsory Delisting
- A stock exchange may delist a company if it
- Has incurred losses or negative net worth.
- Has not complied with listing requirements.
- Has been suspended for a long duration.
- Investors are to be compensated based on a fair valuation done by an independent valuer.
Exemptions
Certain situations, such as delisting due to company merger/amalgamation or pursuant to a resolution plan under the Insolvency and Bankruptcy Code, were exempt from the guidelines.
Disclosures and Transparency
- Timely disclosures were required to stock exchanges.
- Board resolution, public announcements, and a letter of offer were mandatory steps.
Repeal and Replacement
The 2003 Guidelines were replaced by the SEBI (Delisting of Equity Shares) Regulations, 2009, which came into force on June 10, 2009, providing a more structured legal framework under the SEBI Act.
Here’s a summary of the SEBI (Delisting of Equity Shares) Regulations, 2009, which replaced the 2003 Guidelines and provided a more comprehensive and legally binding framework:
SEBI (Delisting of Equity Shares) Regulations, 2009
Objective
To establish a clear, consistent, and investor-friendly regulatory framework for the delisting of equity shares from Indian stock exchanges.
Applicability
To establish a clear, consistent, and investor-friendly regulatory framework for the delisting of equity shares from Indian stock exchanges.
Types of Delisting
1. Voluntary Delisting
Initiated by the company/promoters with the intention to remove its shares from one or all stock exchanges.
✔️ Key Conditions:
- Shareholder approval: Special resolution through postal ballot.
- Exit offer: Mandatory if delisting from all stock exchanges.
- Minimum promoter shareholding post-delisting: 90% or more.
- Reverse Book Building (RBB):
- Used to determine exit price.
- Final price = the price at which promoter can acquire required number of shares.
- Eligible exchanges: Must remain listed on at least one nationwide stock exchange if opting for partial delisting.
2. Compulsory Delisting
Initiated by the stock exchange for non-compliance or violations.
✔️ Grounds for Compulsory Delisting:
- Non-compliance with listing obligations.
- Suspended for a long time (typically 6 months or more).
- Fraudulent or unfair practices.
✔️ Exit for Investors:
- Independent valuation: Done by a SEBI-registered valuer.
- Promoters are required to buy back shares from public shareholders at this value.
Important Provisions
✔️ Delisting from All Stock Exchanges
- Exit opportunity mandatory.
- RBB process required.
- SEBI may exempt strict compliance in certain strategic or restructuring cases.
✔️ Delisting from One or Some Exchanges
- No exit offer needed if shares continue to be listed on at least one nationwide stock exchange (e.g., NSE or BSE).
Promoter Obligations
- Must appoint a merchant banker.
- Open an escrow account with 100% of estimated outflow before opening the offer.
- Must accept shares tendered at or below the discovered price.
Timeline and Process (Indicative)
- Board Resolution.
- Shareholder approval.
- In-principle approval from stock exchanges.
- Public announcement and offer document.
- Reverse book building (RBB).
- Final price determination.
- Payment to shareholders and delisting.
Recent Updates
These 2009 Regulations were further repealed and replaced by the SEBI (Delisting of Equity Shares) Regulations, 2021, which simplified timelines and processes, enhanced disclosures, and introduced streamlined mechanisms such as:
- Fixed price offers for small companies.
- Optional RBB in some cases.
- Time-bound delisting processes.
🔄 Comparison: SEBI Delisting Regulations 2009 vs. 2021
| Feature | 2009 Regulations | 2021 Regulations |
|---|---|---|
| Objective | Ensure fair and transparent delisting process | Simplify, rationalize, and expedite delisting process |
| Exit Mechanism | Reverse Book Building (RBB) mandatory | RBB is retained but streamlined; fixed price offers allowed for small companies |
| Timeline | ~117 working days end-to-end | Reduced to ~76 working days |
| Promoter Shareholding Threshold for Success | 90% post offer | 90% post offer (unchanged) |
| Shareholder Approval | Special Resolution (postal ballot), 2x majority of public shareholders needed to vote in favor | Same requirement retained |
| Escrow Requirement | 100% of estimated consideration before offer | Same, but earlier funding of escrow account mandated |
| Compulsory Delisting | Valuation by independent valuer; promoter to buy shares | Same, with more structured guidelines |
| Delisting from Subsidiary/Narrow Exchanges | No exit offer needed if listed on nationwide exchange | Retained, but clarified |
| Fixed Price Delisting | Not allowed | Permitted for small companies (paid-up capital < ₹10 crore and net worth < ₹25 crore) |
| Role of Stock Exchanges | Procedural oversight | Enhanced responsibility, including monitoring timelines and ensuring compliance |
| Innovations Introduced | — | Special delisting through schemes (e.g. IBC), online RBB platform, early disclosures by acquirer |
📊 Comparison: SEBI Delisting Regulations – 2009 vs 2021
| Feature | 2009 Regulations | 2021 Regulations |
|---|---|---|
| Legal Format | Regulations under SEBI Act, 1992 | Repealed 2009 version, new Regulations under SEBI Act |
| Promoter Holding Requirement | Post-delisting holding of ≥90% mandatory | Same requirement retained |
| Reverse Book Building (RBB) | Mandatory for all voluntary delistings | RBB retained, but exempted in specific cases like: exit offers under IBC, schemes of arrangement, small company route |
| Timeline | Approx. 100–130 days for completion | Streamlined to ~75 days for faster processing |
| Escrow Account | 100% of consideration to be deposited before public announcement | Same, but now stricter monitoring and escrow top-up timelines |
| Small Companies Delisting | Not well defined | Small companies (paid-up cap: ₹10 Cr; net worth: ₹25 Cr) allowed fixed price delisting, no RBB required |
| Shareholder Approval | Special resolution via postal ballot, then exit offer | Same, but now includes e-voting and easier procedural requirements |
| Role of Merchant Banker | Acted as intermediary throughout | Retained with enhanced responsibilities and disclosures |
| Penalty & Enforcement | Limited provisions | Stricter compliance requirements, penalties for delays and false disclosures |
| Compulsory Delisting | Done by exchanges; valuation by independent valuer | Enhanced safeguards and defined valuation rules for public shareholders |
| Delisting via Scheme (M&A, IBC) | Often unclear or ad hoc | Now specifically covered and exempted from full process if approved by NCLT or SEBI |
Summary of Key Improvements in 2021:
- Faster timelines.
- Greater clarity for small companies and schemes under IBC/M&A.
- Regulatory certainty.
- Investor protection mechanisms strengthened.
Practical exemptions to RBB in appropriate cases.
📄 Full Text of Regulations (PDF)
You can download the official PDFs from SEBI’s website:
- [2009 Regulations (Archived)]
🔗 https://www.sebi.gov.in/legal/regulations/aug-2009/sebi-delisting-of-equity-shares-regulations-2009-last-amended-on-december-31-2018-_15260.html - [2021 Regulations (Current)]
🔗 https://www.sebi.gov.in/legal/regulations/jun-2021/sebi-delisting-of-equity-shares-regulations-2021_50540.html