SEBI Guidelines
Overview
These guidelines are referred to as the Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003, issued under Section 11(1) read with Section 11A(2) of the SEBI Act, 1992.
The objective of these guidelines is to protect investor interests and ensure transparency and fairness in the securities market.
Definitions
For the purposes of these guidelines:
Authority means the Central Listing Authority established under the Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003.
Board means the Securities and Exchange Board of India (SEBI) established under Section 3 of the SEBI Act, 1992.
Compulsory Delisting means delisting of a company’s securities by a recognized stock exchange.
Delisting Exchange means the stock exchange from which a company’s securities are proposed to be delisted in accordance with these guidelines.
Exchange means a stock exchange recognized under Section 4 of the Securities Contracts (Regulation) Act, 1956.
1. Norms and Procedure for Delisting
1.1 Public Shareholding Assessment
The following factors are considered while evaluating delisting:
Percentage of equity share capital held by public investors
Existing paid-up equity capital
Market lot size
Share price (high / medium / low)
Market capitalization
SEBI Takeover Regulations (Regulation 21(3))
Clause 40A of the Listing Agreement
1.2 Trading Liquidity
There should be a minimum level of trading activity in the company’s shares.
Adequate liquidity must exist in each trading cycle to enable price discovery.
Companies may be required to appoint market makers.
Prolonged periods of no-trading may be considered as a factor for delisting.
1.3 Financial and Business Viability
The company should be operational and demonstrate reasonable revenue, income, and profitability.
Financial strength is assessed through earnings, reserves, and dividend history for the previous 2–3 financial years.
The company must show sustainable business operations and earning capacity.
2. Exit Price Determination
Any promoter seeking delisting must determine an exit price using the book-building process as specified in Schedule II of the guidelines.
The offer price shall have a floor price, calculated as the average traded price over the preceding 26 weeks on the stock exchange where the shares are most frequently traded.
There shall be no maximum price ceiling.
For infrequently traded securities, the exit price shall be determined in accordance with Regulation 20(5) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations.
Stock exchanges shall provide infrastructure for transparent price display to ensure investor access and fairness.
3. Delisting Procedure
3.1 Delisting Decision Panel
The decision for compulsory delisting shall be taken by a panel constituted by the stock exchange, comprising:
Two directors or officers of the exchange (including one public representative)
One investor representative
One representative from the Central Government (Department of Company Affairs / Regional Director / Registrar of Companies)
Executive Director or Secretary of the Exchange
3.2 Procedural Requirements
Due notice of delisting must be issued to the company and all other stock exchanges where the securities are listed.
Formal notice of termination of the Listing Agreement shall be provided.
Companies may appeal against compulsory delisting orders by filing an appeal with SEBI.
4. Polemarch SEBI Compliance Disclaimer
Polemarch is not a stock exchange recognized by the Securities and Exchange Board of India (SEBI) under the Securities Contracts (Regulation) Act, 1956.
Polemarch does not facilitate secondary market trading of securities on its platform. All transactions relating to unlisted shares are conducted outside the platform, and users are solely responsible for ensuring compliance with applicable laws, including but not limited to:
SEBI regulations
RBI guidelines
FEMA
Companies Act, 2013
Any other applicable Indian laws
In the event of non-compliance, users shall be solely responsible for any legal or regulatory consequences.
Unlisted shares are subject to limited regulatory oversight compared to listed securities. Polemarch’s research reports and content are provided for educational and informational purposes only and shall not be construed as investment advice.
Users are advised to conduct independent due diligence and consult qualified professionals before making any investment decisions.
GUIDELINES
Statutory Guidelines
These guidelines shall be called “Securities and Exchange Board of India (Delisting of Securities) Guidelines 2003”. These guidelines are being issued under section 11(1) of SEBI Act, 1992, read with sub-section (2) of Section 11A of SEBI Act, with the objective to protect the interest of investors in the securities market.
- Definitions
• ‘Authority’ means the Central Listing Authority established under the Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003.
• ‘Board’ means the Securities and Exchange Board of India established under section 3 of the Act.
• ‘compulsory delisting’ means delisting of the securities of a company by an exchange.
• ‘delisting exchange’ means the exchange from which the securities of the company are proposed to be delisted in accordance with these Guidelines.
• ‘Exchange’ means any stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956.
1.1 Norms and Procedure for Delisting (Schedule III, Guideline 17.1)
1. The percentage of equity capital (floating stock) in the hands of public investors.
This may be seen with reference to:
• Existing paid-up equity capital
• Market lot
• Share price – very high, medium, low
• Market Capitalisation
• SEBI’s Takeover Regulations-Regulation 21(3)
• Clause 40A of the Listing Agreement
2. The minimum trading level of shares of a company on the exchanges. There should be some liquidity in every trading cycle. There should be some volume of trading for price discovery on the market. The Company should appoint market makers. Criteria of no-trading may be considered.
3. Financial aspect/Business aspects:
• The company should generate reasonable revenue/income/profits. It should be operational/working. It must demonstrate earning power through its financial results, profits, reserves, dividend payout for the last 2/3 years.
1.2 Exit Price Determination
Any promoter of a company that desires to delist from the stock exchange shall determine an exit price for delisting of securities in accordance with the book-building process described in Schedule II of these guidelines. The offer price shall have a floor price, which will be the average of 26 weeks traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date of the public announcement and without any ceiling of maximum price. In the case of infrequently traded securities, the offer price shall be as per regulation 20(5) of the SEBI (Substantial Acquisition and Takeover) Regulations, and the infrequently traded securities shall be determined in the manner explained under regulation 20(5) of the SEBI (Substantial Acquisition and Takeover) Regulations. The stock exchange(s) shall provide the infrastructure facility for display of the price at the terminals of the trading members to enable the investors to access the price on the screen to bring transparency to the delisting process.
1.3 Delisting Procedure
1. The decision on delisting should be taken by a panel to be constituted by the Exchange comprising the following:
• Two directors/officers of the Exchange (one director to be a public representative)
• One representative of the investors
• One representative from the Central Government (Department of Company Affairs)/ Regional Director / Registrar of Companies
• Executive Director / Secretary of the Exchange
2. Due notice of delisting and intimation to the company as well as other Stock Exchanges where the company’s securities are listed to be given.
3. Notice of termination of the Listing Agreement to be given.
4. An appeal against the order of compulsory delisting may be made to the SEBI.
1.4 Polemarch SEBI Compliance Disclaimer
Polemarch.com is NOT a stock exchange recognized by the Securities Exchange Board of India (SEBI) under the Securities Contract (Regulation) Act, 1956. Polemarch.com does not allow any secondary market trading of securities on the Platform. Buyers and sellers are required to confirm compliance with all laws and regulations set up by SEBI, RBI, FEMA Act, Companies Act 2013, or any other relevant Indian acts or laws with regard to buying unlisted shares in India. In the event of a violation, they will be held responsible for any legal consequences. While unlisted shares are not as tightly regulated as listed shares, SEBI does have guidelines to protect investors in unlisted public companies. Polemarch emphasizes that its research reports are for educational purposes only and should not be considered investment advice. Buyers/sellers should conduct proper due diligence before transacting.
