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SEBI recasts delisting rules to make M&A easier

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SEBI has amended rules pertaining to delisting of shares of a company following an open offer as part of efforts to make mergers and acquisitions for listed firms more convenient.

Under the new framework, the acquirers need to disclose their intention to delist the firm via an initial public announcement, according to a notification.

If the acquirer wishes to delist the target company, the acquirer must propose a higher price with suitable premium over the open offer price. In the existing framework, if an open offer is triggered, compliance with takeover norms could take the acquirer’s holding to above 75% or even 90%.

However, to ensure compliance with the Securities Contract (Regulation) Rules, the acquirer would need to first bring his/her stake down to 75% as the norms would not let the acquirer even to attempt delisting unless the holding is lowered.

Such contradictory transactions pose complexity in the takeover of listed firms.


SEBI has amended rules pertaining to delisting of shares of a company following an open offer as part of efforts to make mergers and acquisitions for listed firms more convenient.

Under the new framework, the acquirers need to disclose their intention to delist the firm via an initial public announcement, according to a notification.

If the acquirer wishes to delist the target company, the acquirer must propose a higher price with suitable premium over the open offer price. In the existing framework, if an open offer is triggered, compliance with takeover norms could take the acquirer’s holding to above 75% or even 90%.

However, to ensure compliance with the Securities Contract (Regulation) Rules, the acquirer would need to first bring his/her stake down to 75% as the norms would not let the acquirer even to attempt delisting unless the holding is lowered.

Such contradictory transactions pose complexity in the takeover of listed firms.

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