Sebi proposes delisting mechanism for non-convertible debt securities

Within five working days from the date of obtaining approval from all the holders of non-convertible debt securities, the listed entity should make the final application for delisting to the exchange.In case of a failure of the delisting plan, Sebi suggested that the delisting proposal will be considered to have failed under the circumstances for non-receipt of in-principle approval from the stock exchange, such as non-receipt of no-objection certificate from the debenture trustee and non-receipt of approval from all the holders of non-convertible debt securities.

Capital markets regulator Sebi has proposed a mechanism for the voluntary delisting of non-convertible debt securities.

Under the mechanism, an entity should not be permitted to delist a few non-convertible debt securities while other non-convertible debt securities continue to remain listed. Accordingly, the proposed mechanism would apply to the voluntary delisting of all listed non-convertible debt securities from all or any of the recognised stock exchanges.

The proposed mechanism would not be applicable to the delisting of non-convertible debt securities of a listed entity that have been delisted by the stock exchanges as a consequence of any penalty or delisted under a resolution plan approved under the IBC.

Notwithstanding this, a listed entity that has more than 200 non-QIB (qualified institutional buyers) holders in any ISIN (International Securities Identification Number) relating to listed non-convertible debt securities, should not be able to voluntarily delist any of its listed non-convertible debt securities, Sebi said.

The regulator came out with the proposal in the absence of any specific provision for the delisting of non-convertible debt securities in the extant provisions.

The Securities and Exchange Board of India (Sebi) has sought public comments on the proposals by May 26.

In the proposed mechanism, the listed entity will have to make an application to the stock exchange for seeking in-principle approval of the proposed delisting of non-convertible debt securities within 15 working days from the date of passing of the special resolution or receipt of any regulatory approval, whichever is later. Such application should be disposed of by the exchange within 15 days.

Sebi has suggested that all the events pertaining to the proposal of delisting in respect of non-convertible debt securities, starting from the placing of the agenda for delisting to the board of directors and till the delisting is completed, should be disclosed as material information to the exchange.

The listed entity will have to send the notice of delisting to the holders of non-convertible debt securities within three working days from the date of receipt of in-principle approval from the exchanges. Within five working days from the date of obtaining approval from all the holders of non-convertible debt securities, the listed entity should make the final application for delisting to the exchange.

In case of a failure of the delisting plan, Sebi suggested that the delisting proposal will be considered to have failed under the circumstances for non-receipt of in-principle approval from the stock exchange, such as non-receipt of no-objection certificate from the debenture trustee and non-receipt of approval from all the holders of non-convertible debt securities. In case of failure of the delisting proposal, the listed entity should intimate the same to the exchange within one working day from the date of such event of failure.

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