Sebi Delisting Rules: PSU Relief
- The Securities and Exchange Board of India (SEBI) has introduced new measures to simplify the voluntary delisting process for Public sector Undertakings (PSUs). The changes, approved Wednesday, aim...
- The new regulations apply to PSUs, excluding banks, NBFCs and insurance firms, where the Indian government or other psus hold at least 90% of the total shareholding.
- Under the amended rules, the delisting price must be at least 15% above the floor price.
SEBI is streamlining delisting rules for Public Sector Undertakings (PSUs),offering meaningful relief. These changes, impacting PSUs with considerable government ownership, introduce a fixed-price mechanism, replacing the previous shareholder approval process. The new regulations clarify that the delisting price must exceed the floor price by at least 15%, ensuring fair valuation for shareholders. Unclaimed payments are also addressed, safeguarding the interests of investors, with funds being transferred to a designated account or the IEPF/IPEF. Get the latest news on indian finance with News Directory 3. The goal is to accelerate restructuring and improve financial health. Discover what’s next for PSU delisting.
SEBI Eases Delisting Rules for Public Sector Units
The Securities and Exchange Board of India (SEBI) has introduced new measures to simplify the voluntary delisting process for Public sector Undertakings (PSUs). The changes, approved Wednesday, aim to address challenges faced by PSUs with low public float, were market prices may not accurately reflect their value. This move is expected to make the delisting process easier and more cost-effective for qualifying PSUs, playing a crucial role in their restructuring.
The new regulations apply to PSUs, excluding banks, NBFCs and insurance firms, where the Indian government or other psus hold at least 90% of the total shareholding. A key change is the introduction of a fixed-price mechanism, which eliminates the need for two-thirds majority approval from public shareholders. This reform addresses concerns that minority shareholders could hinder the delisting process, impacting the PSU’s ability to restructure effectively.
Under the amended rules, the delisting price must be at least 15% above the floor price. The floor price is steadfast by the highest of the volume-weighted average price over the past 52 weeks, the highest acquisition price in the past 26 weeks, or a valuation by two independent registered valuers.This ensures a fair price for shareholders during the delisting process.
To safeguard the interests of remaining public shareholders, SEBI has established a mechanism for unclaimed payments. If a PSU undergoes voluntary strike-off within 13 months of delisting,funds due to non-tendering shareholders will be transferred to a designated account for seven years. Afterward, the money will move to the Investor Education and Protection fund (IEPF) or SEBI’s Investor Protection and Education fund (IPEF). Investors can still claim their dues from these funds after the transfer, ensuring their rights are protected.
What’s next
These changes, finalized after a May 2025 public consultation and input from SEBI’s Primary Markets Advisory Committee, are anticipated to streamline PSU delisting, making it faster and more efficient. The new framework aims to facilitate restructuring and improve the overall financial health of participating PSUs.