Securities and Exchange Board of India (SEBI) is reviewing the regulations for delisting of shares by considering a fixed price option, reviewing trading plans for insiders while considering bringing in a mechanism of instantaneous settlement in exchanges.

SEBI  chairperson Madhabi Puri Buch also said that the regulator was undertaking an ‘architectural shift’ in the implementation of disclosure regulations on rumours by inviting the industry to formulate standards for their easy implementation. 

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At present, 90 per cent stake by the parent or promoter is the threshold for delisting and price discovery is through a reverse book-building process. Buch said that the regulator had received feedback from companies and had data that certain constituents had made it their business model to corner shares in the market beforethe delisting process and jack up prices, which may not be the fair price of the stock. 

Keki Mistry panel

An advisory committee under Keki Mistry has been formed to relook at the delisting regulations, which is expected to be ready by the end of the year. One of the options being discussed is to have a fixed price for delisting of the shares. 

In another major move, the markets regulator is also looking at the prospect of introducing instantaneous settlement in exchanges so that pay in and payout, both of shares and funds can take place in real time through the use of UPI. Buch said that the technology was already there for it. SEBI would be looking at the response to the ASBA-like product in secondary market transactions in order to gauge its success before introducing instantaneous settlements. But she made it clear that this would be not too far in the future.

Disclosure regulations

Prohibition of insider trading regulations are also being revised, as the trading plan has to be declared in advance by companies locking them in to a certain price, and providing no flexibility for changes while deciding on the materiality of transactions. An advisory committee is looking into the regulations and a consultation paper on this is also in the works.

One of the biggest changes that SEBI is planning is in the way its disclosure regulations are being implemented by industry. Buch said that they had feedback from corporates that disclosures with regard to rumours of a price-sensitive nature was a challenge especially when news on companies was appearing in diverse media outlets. She said that one way of dealing with it was by setting up standards that are devised by the industry. 

Buch said that SEBI had written to heads of Nifty50 companies as well as industry bodies such as CII, FICCI, Assocham, stock exchanges and ICAI to put in place standards that would ensure ease in compliance with disclosure requirements.

A pilot programme would be initiated in this respect and if it worked it would be scaled up across all listed companies. 

Buch said that the reason of existence for SEBI was capital formation and its main themes were development of the capital markets, regulations and investor protection. 

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