SEBI approves relaxed delisting norms for PSUs with over 90%

The move introduces special provisions for PSUs where the Government of India and/or other PSUs hold 90% or more equity, allowing them to exit the markets through a fixed price delisting mechanism.

The Securities and Exchange Board of India (SEBI) has approved key amendments to the SEBI (Delisting of Equity Shares) Regulations, 2021, aimed at facilitating the voluntary delisting of Public Sector Undertakings (PSUs) with a majority government stake. The move introduces special provisions for PSUs where the Government of India and/or other PSUs hold 90% or more equity, allowing them to exit the markets through a fixed price delisting mechanism.

The regulator has eased several procedural requirements to streamline the delisting process for such entities, which often have minimal public float and legacy listings.

“All of these proposals have been consultation papers, gone to respective committees, and came to the Board. You are aware that we have a regulation on how to bring in changes in regulations, which mandates public consultations. Fourth proposal relates to the voluntary delisting of PSUs,” SEBI Chairman Tuhin Kanta Pandey said.

“We are now introducing special provisions for these PSUs—these apply to PSUs where the promoter—typically the Government—holds 90% or more equity. Many of these companies were listed historically with minimal public float and may now need to be delisted. These PSUs do not include any BFSI companies,” he added.

Fixed price route and floor price mechanism

Under the revised norms, eligible PSUs can delist through a fixed price process, bypassing the conventional reverse book-building route. The offer price will be set at a minimum 15% premium over the floor price, which will be determined by registered valuers, instead of relying on market-based mechanisms that may not reflect the true value due to thin trading.

Another major change is the waiver of the requirement for approval by two-thirds of public shareholders, which has often proven to be a bottleneck in PSU delistings with extremely low public shareholding.

“Under the new provisions, eligible PSUs can delist through a fixed price process, with the offer price set at a minimum 15% premium over the floor price, which will be determined by registered valuers. Additionally, the requirement for approval by two-thirds of public shareholders has been waived, given the extremely low public float in such cases,” Pandey stated.

Future of delisted PSUs

The market regulator has clarified that once delisted, these PSUs may continue as unlisted entities, opt for voluntary strike-off, or proceed toward winding up. However, if a delisted PSU chooses to be struck off, it must initiate the process within 30 days after one year from the date of delisting.

According to SEBI, only five PSUs currently meet the criteria where promoter holding exceeds 90%, making this a targeted regulatory change. The move is expected to support the government’s strategic disinvestment efforts and simplify exit strategies for legacy public sector firms with negligible public shareholding.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

SEBI registered research analyst

Stock market

Accurate intraday tips

Call or whatsapp: +91 9924987385 / +91 7096190322

www.moneywealth.co.in