Sebi provides exemptions for delisting of The United Provinces Sugar Company

Sebi, in an order passed on Monday, said that although the company has been listed for over 40 years, it has continuously failed to comply with the minimum public shareholding requirement.In its application, the company said that since CSE is non-operational and its shares are not listed on any nationwide stock exchange, there is no investor interest in the shares of the firm.

Markets regulator Sebi has provided certain exemptions for voluntary delisting of the shares of The United Provinces Sugar Company Ltd (TUPSCL). The company's shares were listed on the Calcutta Stock Exchange (CSE), which is non-operational for more than 40 years. Nearly 95 per cent of its stake is held by promoters, while the rest is with public shareholders.

In August 2020, the company applied to the watchdog seeking exemption from minimum public shareholding requirement and certain provisions of delisting regulations. Sebi, in an order passed on Monday, said that although the company has been listed for over 40 years, it has continuously failed to comply with the minimum public shareholding requirement.

In its application, the company said that since CSE is non-operational and its shares are not listed on any nationwide stock exchange, there is no investor interest in the shares of the firm. Various methods prescribed by Sebi to achieve minimum public shareholding compliance are not practically feasible, it said.

Besides, it also sought exemption from requirement of written consent of 90 per cent or more of public shareholders. The watchdog noted that investments of public shareholders in TUPSCL have remained frozen and their exit opportunity has been denied for want of trading and liquidity in the shares.

The company seeks to provide exit to public shareholders in line with the relaxed procedure prescribed under Regulation 27, it added. Regulation 27 of the delisting regulations permits small companies having lesser public shareholding to get delisted with minimum procedural formalities while ensuring adequate protection of the rights of public shareholders.

Passing the order, Sebi said that enabling delisting of the company, albeit with some relaxations, would be in the overall interest of the public shareholders of the firm. The extant proposal by TUPSCL to voluntarily delist from CSE could probably be the only ray of hope to the public shareholders to liquidate their investment in the applicant company, the order said.

While allowing the relaxations, Sebi asked the firm to make public announcement regarding its delisting proposal within 30 days of the order. Pursuant to delisting of the equity shares, the company's promoters should continue to accept shares tendered by any remaining public shareholder for up to two years from the date of delisting.

The shares should be accepted for the same price at which the earlier acceptance of shares was made and in a manner supported by bank record/audit trail of the payment, Sebi said..