Sebi revamps delisting rules, amends alternative investment funds (AIF) norms

By: |
March 25, 2021 8:49 PM

In addition, the regulator has decided to remove the list of restricted activities or sectors from the definition of venture capital undertaking, to provide flexibility to venture capital funds registered under alternative investment funds (AIFs) in making investments.

Sebi

To make delisting process more transparent and efficient, Sebi on Thursday decided that promoters should disclose their intention to delist the company by making an initial public announcement.

In addition, the regulator has decided to remove the list of restricted activities or sectors from the definition of venture capital undertaking, to provide flexibility to venture capital funds registered under alternative investment funds (AIFs) in making investments.

In a statement, Sebi said its board has approved several amendments to delisting norms with an objective to make the process more transparent and efficient.

Under the new framework, Sebi said the committee of independent directors will be required to provide their reasoned recommendations on the proposal for delisting.

Timelines for completion of various activities forming part of delisting process have been introduced or revised to make the process more efficient, Sebi said.

Promoter or acquirer will be required to disclose their intention to delist the company by making an initial public announcement.

Besides, promoter or acquirer will be permitted to specify an indicative price for delisting which should not be less than the floor price.

Further, promoter will be bound to accept the price discovered through reverse book building if the same is equal to the floor price or indicative price.

In addition, role of merchant banker involved in the delisting process has been elaborated.

With regard to AIF, Sebi has approved amendment to AIF norms to provide a definition of ‘start-up’ as specified by the central government for the purpose of investment by angel funds.

Besides, it decided to allow AIFs, including Fund of AIFs, to simultaneously invest in units of other AIFs and directly in securities of investee companies subject to certain conditions.

It provided clarity on scope of responsibilities of managers and members of investment committees. It also prescribed a code of conduct for AIF, trustee and directors of the trustee/designated partners/directors of the AIF, manager, members of investment committee and key management personnel of AIF and manager.

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