How can I sell shares that are going to be voluntarily de-listed?
If you own the stock of a company that has opted for voluntary de-listing, the company is required to give you two options to exit investments as per the delisting guidelines laid down by SEBI:
1. Offload your shares during the buyback:
When a company is going to voluntarily de-list, promoters are required to make a public announcement regarding a buyback. Eligible shareholders can exit investments by tendering their shares for the buyback. They will be sent a letter along with a bidding form as per which a promoter/acquirer will buy shares back, through reverse book-building. The reverse book-building process is used for efficient price discovery during a buyback.
The final buyback price is determined based on the price at which maximum shares have been offered. When a company voluntarily de-lists for expansion reasons, they usually offer a buyback price at a premium, which can result in significant profits.
Shares can be tendered at or above the given floor price through the online bidding system of the exchanges, which stays open for 5 days. When the number of tendered shares reaches the specified limit, the de-listing is considered successful. In case this limit is not met (not enough shares submitted for the buyback), the company will remain listed.
The promoter can choose to accept or reject the price discovered during the bidding process within five working days:
- If the price is accepted, the shareholders must be paid within 10 working days.
- If the price is rejected, the offered shares must be returned to the shareholders within 10 working days. These shares can be tendered to the promoter at the discovered price, within a year of the de-listing date.
If rejected, the promoter can make a counter-offer within 2 working days, which must be made above the company’s book value and below the discovered price. The company must make a public announcement of the counter-offer within 4 working days of the closure of reverse book-building, and the process should start within 7 working days of this announcement. Counter-offer bids will be accepted for 5 days, and its result must be announced within 5 working days. Shareholders who hadn’t tendered their shares during the buyback can do so during the counteroffer period. Shareholders can also choose to withdraw the shares tendered during the buyback bid, within 10 working days of the counteroffer.
2. Hold till you find a buyer:
If you choose not to participate in the buyback, you can hold these shares till you find a buyer in the over-the-counter market.