Sebi will take a proposal on new delisting guidelines to return on board quickly

“There was a popular belief that we would never revise the delisting regulations and that we would stick with the reverse book building process. A consultation paper has already been floated, and Sebi has received a lot of feedback. At the next board meeting, we are taking that proposal to our board,” Buch said. on Thursday in Mumbai while addressing the Ficci Capital Markets Conference or CAPAM 2023.

A Sebi sub-group considered providing a number of alternatives to the reverse book building process, including an option to dispose of shares at a fixed price. Its consultation paper published in August said: “The fixed price route will give acquirers and shareholders certainty about the price of the delisting offer. This would help shareholders decide going forward whether to participate in the delisting process or not at the given price.”

According to existing regulations, the exit price is determined when the cumulative shareholding of the promoter, together with the shares offered by public shareholders, reaches 90% of the total issued shares under a reverse book building mechanism.

During reverse book building, shareholders are invited to submit bids at prices above or equal to the floor price. After the bid closing period, the buyback price is determined based on the bids collected. This process helps ensure fair price discovery for the buyback.

However, Sebi discovered that certain items used this opportunity to rig prices. Sebi’s main objective is to curb possible share manipulation in a company that has chosen to delist from stock exchanges.

In particular, Buch pointed out that the suspension of fundraising applications before the regulator is not a bad thing; “The bad thing is the aging of such applications”. The focus we have on suspension and aging is because of the commitment the regulator has made to the capital market stakeholders, she added.

She said Sebi’s role will always be to facilitate capital formation in the economy and highlight the need for effective regulatory processes. “In the process of capital formation, delays cost the ecosystem… Everyone understands that in markets, time is money and money is time, and any delay by the regulator causes enormous inconvenience but real costs to market participants, especially the. issuers .”

Buch emphasized that capital formation depends on a balance of trust, transparency and development, and that Sebi’s goal is to bring confidence to the system. While the regulator is keenly aware of the need for ease of doing business, the Sebi chief said, “If there is no trust, there will be no ease of doing business.”

The Sebi chief also pointed to the increasing number of consultation papers floated by the regulator. “Sebi consulted more because the regulator thought markets had become more complex, and it needed to consult participants more to make sure it got it right,” Buch said. She said since 2003, the percentage of consultation documents to the total circulars issued. of Sebi rose from 7% to 33%.

Speaking on the sidelines of the event, the Sebi chief also said that the legal proceedings against the Sahara group will continue irrespective of the death of founder Subrata Roy. “The passing of one individual changes nothing,” she said.

When asked about the refund of ₹25,000 crores to Sahara’s investors, Buch replied: “Our actions depend on the directions of the Supreme Court appointed commission. The expenses were made to the investors who came with the proof of investment.”

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Updated: 17 Nov 2023, 00:06 IST