Sebi clears insider trading norms, delisting rules

Delisting timeline reduced to 76 days

Acting along expected lines, the Securities and Exchange Board of India (Sebi) on Wednesday cleared some major market reforms including new insider trading regulations in place of the two-decade-old norms and amendments to the delisting regulations.

The board, which met on Wednesday in Mumbai, deliberated on the Justice N K Sodhi Committee report and public comments received thereon before approving the new regulations, Sebi said in a release.

Sebi had sought review of the extant Insider Trading regulatory regime and constituted a committee under chairmanship of Justice Sodhi to ensure that the regulatory framework dealing with insider trading in India is further strengthened.

Under the new regulations, the definition of insider has been made wider by including persons connected on the basis of being in any contractual, fiduciary or employment relationship that allows such person access to unpublished price sensitive information (UPSI).

The Sebi board also approved amendments to the Sebi (Delisting of Equity Shares) Regulations, 2009. Under the new norms, timelines for completing the delisting process has been reduced from 137 calendar days to 76 working days.

Delisting shall be considered successful only when the shareholding of the acquirer together with the shares tendered by public shareholders reaches 90 per cent of the total share capital of the company and if at least 25 per cent of the public shareholders, holding shares in dematerialised  mode as on the date of the board meeting which approves the delisting proposal, tender in the reverse book-building process.

Companies whose paid up capital does not exceed Rs 10 crore and net worth does not exceed Rs 25 crore as on the last day of the previous financial year are exempted from following the reverse book-building process.

In a move to protect the interest of retail shareholders, Sebi has mandated that a delisting proposal can only be made if it is in the interest of the shareholders.

The board of the company shall approve the proposal for delisting only after satisfying itself that delisting is in the interest of shareholders and that the company is in compliance with applicable securities laws, Sebi said. 

The board also approved the conversion of listing agreements into Regulations. This  regulation would consolidate and streamline the provisions of existing listing agreements thereby ensuring better enforceability, the release said.