The Securities Exchange Board of India
("SEBI") amended the Securities and
Exchange Board of India (Delisting of Equity Shares) Regulations,
2009 ("Delisting Regulations") by a
notification dated January 12, 2016 ("SEBI
Notification") to revise the applicability of
exemptions provided to small companies in relation to obligations
under Chapter IV, which deals with "exit opportunity" to
be given to the public shareholders during delisting. Chapter IV of
the Delisting Regulations deals with obligations relating to,
inter alia, public announcements, opening of escrow
account before making the public announcement, dispatching letter
of offer to the public shareholders and price determination through
book building process.
Amongst the conditions to be satisfied by small companies to
avail of the exemption from compliance with Chapter IV of the
Delisting Regulations, the SEBI Notification now requires that the
equity shares of the company traded on each recognised stock
exchange is less than 10% (ten percent) of the total
number of shares, during the 12 (twelve) calendar months
preceding the date of the board meeting approving the delisting of
shares, as opposed to the earlier requirement that the equity
shares of the company were not traded in any recognised stock
exchange for a period of 1 (one) year immediately
preceding the date of board meeting. In the event the share capital
of the particular class shares is not identical throughout the 12
(twelve) calendar months' period mentioned above, the
weighted average of the shares of such shares will represent the
total number of shares of such class of shares of the company.
With regard to the exit price offered to the public shareholders
during such delisting, it cannot be less than the floor price
determined as per the Delisting Regulations read with the relevant
provisions of and the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011
("Takeover Regulations") in relation to
the determination of offer price for infrequently traded shares.
Prior to the amendment, such price could not be less than the price
arrived at in consultation with the merchant banker.
The SEBI Notification stipulates a specified percentage that
must the adhered to in order to avail the exemption. The condition
for formulation the floor price in accordance with the relevant
provisions for the Takeover Regulations for infrequently traded
shares will ensure uniformity in price determination under various
SEBI regulations and that the interests of the public shareholders
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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