With the Securities and Exchange Board of India (Sebi) expected to announce “easier” or “simpler” rules for share delisting on Wednesday, many companies will attempt taking that route, said merchant bankers privy to information.
Essar Shipping is one such example. On Tuesday, shareholders of the Jamnagar, Gujarat-based company have approved delisting of shares from the exchanges. The parent company Essar Group is also seeking shareholders’ nod to delist Essar ports and Essar Oil.
According to Prime Database, 12 companies have been unsuccessful with their de-listing plans since 2010 due to price mismatch between buyers’ and sellers’ price expectations, as well as lack of participation from public shareholders. The amount spent by companies on delisting stands at near decade low in FY15, showed a compilation by Prime.
Firms unsuccessful in delisting their shares include Ricoh India, BOC India, APW President Systems, Elantas Beck (India), Suashish Diamonds, and Saint-Gobain Sekurit India. Other companies like AstraZeneca Pharma, Oracle Financial Services Software, Timken India, Novartis India, and Thomas Cook reportedly tried but failed.
Sources in the know had told FE that Sebi is expected to simplify the price discovery process and reduce the time line, which will help companies save cost as well as time. The simplification in process will check any manipulation in share price associated with a longer time-frame, they added.
The announcement will come after Sebi’s board meeting on November 19. Other issues on the agenda include an improved framework on prevention of insider trading, additional restrictions on wilful defaulters and renewed listing agreement guidelines.