The Securities and Exchange Board of India (SEBI) has put forth a proposal for a mechanism for the voluntary delisting of non-convertible debt securities. Currently, there is no specific provision for the delisting of such securities, and the proposed mechanism aims to address this issue.
Under the proposed mechanism, an entity would not be permitted to delist a few non-convertible debt securities while keeping other such securities listed. Instead, the mechanism would apply to the voluntary delisting of all listed non-convertible debt securities from all or any of the recognized stock exchanges. However, the proposed mechanism would not apply 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 Insolvency and Bankruptcy Code.
In addition, 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 would not be able to voluntarily delist any of its listed non-convertible debt securities. SEBI has sought public comments on the proposal by May 26.
Under the proposed mechanism, the listed entity would 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. The stock exchange should dispose of such application within 15 days.
SEBI has also suggested that all the events regarding 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 until the delisting is completed, should be disclosed as material information to the exchange. The listed entity would 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 an in-principle approval from the exchanges.
Overall, the proposed mechanism would provide a framework for the voluntary delisting of non-convertible debt securities and ensure transparency in the process. The public comments on the proposal will help SEBI fine-tune the mechanism before it is implemented.
