SEBI Relaxes Delisting Rules for PSUs with 90% Government Stake

New Delhi, September 9: The Securities and Exchange Board of India (SEBI) has brought in special relaxations for Public Sector Undertakings (PSUs) in which the government already holds 90% or more equity. The new framework is designed to streamline the voluntary delisting process in case of state-owned companies and make exits more pragmatic.

Key Relaxations in Delisting Rules

Under the new provisions, PSUs will no longer need the approval of two-thirds of the public shareholders, which was previously a prerequisite for delisting. Furthermore, the pricing mechanism has been changed from the traditional reverse book-building process.

These PSUs, however, will be permitted to delist at a fixed price if it is at least 15 per cent above the calculated floor price, without regard to trading activity in the stock.

How the Floor Price Will Be Calculated

The floor price of delisting will be the highest among three benchmarks:

• The volume-weighted average price of trades over the 52 weeks up to the reference date.
• The maximum price paid over the 26 weeks before the reference date.
• The price from a joint valuation report submitted by two independent registered valuers.

Exemptions from the Relaxation

The new provisions will not cover banks, Non-Banking Financial Companies (NBFCs), or insurance companies, even when government holding in these entities crosses the 90 per cent mark.

Safeguards for Minority Shareholders

SEBI has also incorporated safeguards for public investors. Where a PSU is voluntarily struck off in case of delisting, any unpaid consideration to shareholders who did not offer their shares when the one-year exit window was open shall be credited to a specified account with the stock exchange within 30 days of the closure of the window. The fund will be kept for seven years, and investors will have sufficient time to claim their dues.

Implications

The step is likely to hasten the government’s pace of managing its PSU holding, with a protection layer in place for minority shareholders.

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