CAIRR Update August 23, 2023

Summary of SEBI Notification dated 23/08/2023.

This notification is integrated in our free-to-use website ca2013.com.

SEBI Notifies Framework for Voluntary delisting of non-convertible debt securities and non-convertible Redeemable preference shares and the obligations therein.

SEBI has inserted Regulation 64A to 64I in Chapter VIA relating to detailed framework for the Voluntary delisting of the non-convertible debt securities and non-convertible redeemable preference shares.

The key highlights from the notification are:

1.  Applicability

• To voluntary delisting of all listed non-convertible debt securities or non-convertible redeemable preference shares from all the stock exchanges where such securities are listed except in the cases highlighted in the notification.
• Where the delisting is pursuant to a resolution plan as per the provisions of the Insolvency Code, the details of delisting shall be disclosed to the stock exchanges within one working day of the approval of the resolution plan.
• The provisions of the Regulation 59 of the SEBI(LODR) Regulations, 2015 shall not be applicable on the Voluntary delisting of the applicable securities under this chapter.

2.  An application to the stock exchange for seeking in-principal approval for the proposed delisting of the above-mentioned securities, shall be made not later than fifteen working days from the date of passing of the board resolution to that effect or of receipt of any other regulatory approval, whichever is later.

 The same shall be disposed of by the relevant stock exchange within a period not exceeding fifteen working days from receipt of such application.

3.  The process of obtaining necessary approval from all holders of securities shall be commenced within three working days of the grant of in-principle approval and all the events in respect of proposal of delisting of such securities, shall be disclosed as material information to the stock exchanges as soon as reasonably possible but not later than 24 hours from such event.

4.  Disclosure of the following information to the stock exchanges within two working days of receipt of in-principal approval from the stock exchange: 

• The names of the stock exchanges from which the above-mentioned securities are sought to be delisted together with the details of all such securities.
• The cut-off date specified for determining the list of holders of such securities.
•  The objects and reasons for the delisting.
•  The proposed timetable from the cut-off date till the date of making final application to the stock exchanges for delisting.
•  A disclaimer specifying that once the securities are delisted, they shall cease to be under the purview of the Act, rules and regulations prescribed thereunder and the holders of such securities shall not have any recourse to the investor grievance mechanism for any reason.
•  A statement by the board of directors confirming that all material information has been disclosed to the stock exchange.
•  An undertaking that the issuer has not paid or shall not pay any incentive to any investor, directly or indirectly, in connection with delisting.
•  Disclosure of the above securities held by the related parties or by any person on behalf of the issuer or its related parties and an undertaking that such persons shall not vote on the proposal.
•  Additionally, an undertaking that the issuer has not entered or shall not enter into any arrangement with any investor, or the persons referred above, by way of side letters or otherwise which leads to the discrimination amongst the investors.
• A statement by the board of directors certifying that the entity is in compliance with the applicable provisions of securities laws and that the delisting, in their opinion is in the interest of the holders of such securities.
•  Name and contact details of the compliance officer of the entity.

5.  Send the notice of delisting to the holders of such securities, containing all the disclosures as specified in the Notification not later than three working days from the date of receipt of in-principle approval. The notice of delisting shall also contain the provision of e-voting for the holders and a copy of the same shall also be made available on the website of the entity..

6.  Obtain approval from all such security holders within fifteen working days from the date of the notice of delisting and NOC from the debenture trustee in case of the delisting of non-convertible securities.

 7.  The delisting proposal shall be deemed to have failed in case of non-receipt of in-principle approval from any of the stock exchanges; or non-receipt of requisite approval from the holders of such securities or non-receipt of NOC from the debenture trustee in case of proposal for delisting of non-convertible debt securities.

In such cases, the entity shall intimate the same to the Stock exchange within one working day from the date of event of failure of delisting proposal.

8.  A final application shall be made to the stock exchange by the entity within five working days from the date of obtaining requisite approval from the holders of the said securities which shall be disposed of by the stock exchange within fifteen working days of the receipt, following which, the securities shall be delisted from the Stock Exchange.

9.  The entity may choose to delist such securities or shares from all the stock exchanges where it is listed except one such stock exchange having nationwide trading terminal, in such cases the provisions of Reg 64 B to Reg 64 G shall not be applicable and the entity shall:

• Obtain prior approval of the Board of directors.
• Make an application to the stock exchange for delisting.
• Disclose the fact of the delisting from the stock exchange, the reasons thereof and the continuation of listing of such securities on the stock exchange having nationwide terminals, on its website.
• Obtain NOC from the Debenture Trustee in case of proposed delisting of non-convertible debt securities.

To view the SEBI Notification, click here.