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Procedure for Delisting of Small Companies

Meaning of Delisting: One should understand the meaning of the term “listing” before understating the term Delisting. The word “listing” means admissions of a Company’s shares with the Recognized Stock Exchange(s), having or not having nationwide trading terminals. Whereas, Delisting is just opposite of this, it means permanent removal of the Company’s names/security/status/shares from the data base/list of Recognized Stock Exchange(s).

Types of Delisting: There are two kinds of delisting.

A. Compulsory Delisting:
B. Voluntary Delisting.

Compulsory: It means Delisting of Company’s Equity share by a Recognized Stock Exchange as per the provision of SEBI (Delisting of  Equity Shares) Regulation 2009 read with SEBI (Delisting of Equity Shares)   (Amendment) Regulations, 2015.

Voluntary: It means Delisting of Company’s Equity Shares by a Recognized Stock Exchange(s) on the application made by a listed entity, as per the provision of SEBI (Delisting of Equity Shares) Regulation, 2009 read with SEBI (Delisting of Equity Shares) (Amendment) Regulations, 2015.

Small Company: For the purpose of SEBI (Delisting of Equity Shares) Regulation, 2009 including the Amendments thereof, Small Company means a company which satisfies all of the conditions as mentioned below: 

1. Paid up share capital of which does not exceed ten crore rupees and net worth not exceeding twenty five crore rupees as on the last date of the preceding financial year:

2. The Equity shares of the applicant company were not traded in any of the recognized stock exchange for a period of one year immediately preceding the date of board meeting in which the BOD has approved the proposal of Delisting; and

3. The applicant company has not been suspended by any of the recognized stock exchanges having nation-wide trading* terminals for any non compliance in the preceding one year.

*Note: For the purpose of above definition, ‘recognized stock exchange having nationwide trading terminals’ means the Bombay Stock Exchange Limited, the National Stock Exchange of India Limited or any other recognised stock exchange which may be specified by the Board in this regard.

Procedure for delisting of a Small Company, without following the procedure prescribed under Chapter IV i.e. Exit Opportunity.

Sl. No

 Regulation of SEBI  (Delisting of Equity  Shares) Regulation,  2009




8(1A) (i)

Promoter/acquirer have to intimate to the Company about their intention to delist the shares of the Company from the Recognized stock exchanges.



Read with 27(3)(a)

Appoint a merchant banker to carry out due diligence process and to decide an exit price in consultation with the merchant banker.



obtain details of trading in shares of the company for a period of two years prior to the date of board meeting by top twenty five shareholders as on the date of the board meeting convened and details of off-market transactions of such shareholders for a period of two years.



Merchant banker may obtain such other information as he may deem fit for carrying out his due-diligence process.


Pursuant to Section 173 of the Companies Act, 2013 read with Secretarial Standard-1, issued by ICSI

Issuance of Notice of Board Meeting



Obtain Prior approval of BOD


Pursuant to Section 110 of the Companies Act, 2013 read with Secretarial Standard-2, issued by ICSI

Issuance of Postal Ballot Notice (as per Section 110 of the Companies Act, 2013 Read with SS-2)



Obtain prior approval of shareholders by SR passed through Postal Ballot

Special Resolution shall be acted upon only if votes cast in favour amount to at least two times of votes cast against it.



Make an application to the concerned recognized stock for obtaining the in-principal approval

In principal approval in the form as specified by the Recognized Stock Exchange.



An application seeking in-principle approval shall be accompanied by Reconciliation of Share Capital Audit Report under Reg. 55A, covering a period of six months prior to the date of application



Within one year of passing the special resolution, make the final application to the recognized stock exchange.

In the form specified by the recognized stock exchange.



Recognized Stock Exchange shall grant in principal approval within 5 working days from the date of receipt of application, if such application is complete in all respect.

Earlier this period of 5 working days was thirty working day prior to the Amendment in the delisting Regulation by the SEBI dated 24.03.2015.



While granting an In Principal approval the Recognized Stock Exchange shall not unfairly withhold such application, but may require the company to satisfy the compliances as mentioned in Regulation 8(4)(a) to (f).



The promoter have to write individually to all public shareholders in the company informing them of his intention to get the equity shares delisted



Receive the consent of 90% of the public shareholders in writing to the proposal for delisting, and have consented either to sell their shares to the promoter/acquirer or to remain the shareholders even if the company is delisted.  



Promoters have to complete the process of inviting the positive consent within seventy five working days of the invitation made as per clause c of Regulation 27(3).



The promoter/acquirer have to make payment to the shareholders in cash within 15 working days from the date of expiry of 75 working days as stipulated in clause e of Regulation 27(3).


Regulation 8(5)

Apply to the Recognized Stock Exchange for obtaining the final delisting approval along with the proof that the payment has been to the shareholders.


Regulation 27(5)

The Recognized Stock Exchange may delist the Equity shares of the Company upon satisfying itself of compliance with this Regulation.


Receipt of final Delisting Approval.


Published by

CS Manohar Mishra
Category Corporate Law   Report

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