India's market regulator proposes alternate way to delist shares

Aug 14 (Reuters) - Indias market regulator said on Monday companies could offer their shareholders fixed prices for the shares being delisted, proposing an alternate mechanism to delist from stock exchanges.

The Securities and Exchange Board of India (SEBI) floated this idea in a consultation paper released on its website. Such a paper is the first step towards a change in policies.

Currently delisting is carried out via reverse book-building, in which shareholders place offers for the price at which they would sell securities back to large shareholders, who can influence company policy.

The regulator also suggested a framework for companies whose shares are held by investment-holding firms.

If the price arrived after the reverse book building was not acceptable to shareholders, they can make a counter if the offers received are more 50% of the public shareholding or if they are higher than the difference between the stake of large shareholders and 75% total issued shares, SEBI said.

\“Once such counter-offer is made, public shareholders will be given an opportunity to tender their shares,\” it said

The bidding will be open for five days and the fair market value of a companys assets should be considered while fixing the floor price, the regulator said. Floor price is the minimum price at which investors can place bids or offers their shares.

SEBI said the fixed price for delisting cannot be less than the floor price.