SEBI Introduces Special Rules for Public Sector Undertakings Delisting [Read Notification]

According to the notification, a new Part-F has been added to the 2021 Delisting Regulations, specifically for PSU delisting (excluding banks, NBFCs, and insurance companies). The general rules for delisting will continue to apply but with some special conditions for PSUs.

First, PSU shares may be delisted from all recognized stock exchanges if the acquirer’s shareholding (including other PSUs) reaches at least 90% of total issued shares. In addition, shareholders must approve the delisting through a special resolution passed via postal ballot or e-voting, with full disclosure of all material facts in the explanatory statement.

Second, the delisting will follow a fixed price process rather than the book-building route. To safeguard investors, SEBI has tightened pricing rules:

• The floor price must not be less than the highest of:
• The 52-week volume-weighted average price paid by the acquirer and persons acting in concert.
• The highest price paid during the last 26 weeks by the acquirer.
• The value determined by two independent registered valuers using industry-standard methods like book value, adjusted book value, trading multiples, and income approach.
• On top of this, the final delisting price must be at least 15% higher than the determined price.

Third, SEBI has laid down rules for handling public shareholders’ dues. If a delisted PSU later undergoes voluntary strike-off under applicable laws (within a year after delisting), the dues of public shareholders who did not tender their shares must be:

• Transferred to a designated stock exchange account for 7 years, during which investors can claim their dues.
• After 7 years, unclaimed amounts will be moved to the Investor Education and Protection Fund (IEPF) under the Companies Act, 2013.
• If not possible, the amount will be transferred to SEBI’s Investor Protection and Education Fund.
• Even after transfer, investors can still claim amounts via the designated stock exchange.

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