With a view to make it easier for promoters to delist their companies from stock exchanges, market regulator Sebi is mulling to shorten the delisting process to two months.
Public comments sought (till May 30) by the Securities and Exchange Board of India (Sebi) on the delisting process are currently being analysed and final rules will be announced very soon, according to official sources.The new norms will help companies save cost and time with a faster process and also check any manipulation in share price associated with a longer time-frame.
Currently, a delisting process takes a minimum of 137 days for completion and at times, it take more than a year.
As per the new rules, the whole process could be completed in about two months from the day a company informs exchanges or convenes a board meeting in this regard. This include a completion of offer in one month and additional one month for formalities for shares to get delisted by the exchanges and for various other approvals.
Besides, a company has to make a public announcement regarding the delisting process soon after the board meeting and letter of offer has to be dispatched within a week. The delisting offer would be for a period of 4-5 days.According to new norms, a company has to make payment or return the shares within a month as against the current practice, which takes about three months.
The new rules on the matter come against the backdrop of concerns raised by various entities about existing delisting process which at times is also seen as time-consuming.last month, Sebi had floated a discussion paper on proposed new delisting norms, including reduced time frame and more broader price discovery mechanism.
As Sebi expedites its efforts to recover penalties imposed on defaulters and manipulators, the number of attachment proceedings launched by the market regulator has reached the 400-mark.
The capital markets watchdog began initiating attachment proceedings against defaulters, including individuals and companies, in October last as per the greater powers granted to it through an ordinance promulgated by the government. Since then, the Securities and Exchange Board of India (Sebi) has launched 400 attachment proceedings for recovery of penalties imposed in as many as 87 cases.
These proceedings involve attachment of bank accounts, movable and non-movable properties, shares and debentures, among others.These cases involved recovery of collective penalties totalling close to Rs 2,000 crore imposed on various entities in matters related to violations of capital market norms.In some cases, the attachment orders have been revoked after the concerned entities made the outstanding payments.
One of the attachment orders which has been revoked was passed against MTZ Polyfilms after the company paid the entire dues of Rs 1 lakh. Sebi had appointed D V Sekhar as recovery officer in this case.The latest order, concerning attachment proceeding number 400, is related to the Pyramid Saimira case. Incidentally, the first few attachment orders in October 2013 were also related to the same case.The 400th attachment proceeding has been initiated for recovery of penalties worth Rs 1.27 crore from Pyramid Saimira former promoter P S Saminathan