Sebi Board to discuss voluntary delisting norms, may deliberate on fractional realty platforms too

The regulator released a consultation paper on reviewing the voluntary delisting norms on August 14.

The market regulator is expected to discuss changes to voluntary delisting norms and regulations on fractional real-estate ownership in the Board meeting today.

Chairperson of the Securities and Exchange Board of India (Sebi), Madhabi Puri Buch had said recently that the delisting norms would be discussed in the next meeting with the regulator's Board. She was speaking at FICCI's Capital Market Conference, and said this to illustrate Sebi's approach to regulations, which will be led by data and logic and not dogma.

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Currently, price for the delisting is discovered through a reverse book-building (RBB) process. In this, the public shareholders are invited to tender their shares and the discovered price is that at which the post-offer shareholding of the acquirer (along with the persons acting in concert) crosses 90 percent of the total shares. The advisory committe has recommended that an acquirer be allowed to offer a fixed price--instead of a discovered price--under certain conditions.

There are other suggestions as well such as lowering the threshold for acquirers to make a counter offer and review of the determination of the floor price.

At the conference held on November 16, she said, “There was a popular belief that we will never review the delisting norms and that we will always stay with the reverse book-building process, as many of you know we floated a consultation paper and we have got a lot of feedback and at the next Board meeting we are taking that proposal to our Board.” The regulator released a consultation paper on reviewing the voluntary delisting norms on August 14.

On fractional ownership platforms (FOPs), the consultation paper on classifying them as micro, small and medium real-estate investment trusts (MSM REITs) was floated on May 12 this year.

These platforms, which allow investors to own a fraction of a real-estate property through pooled instruments, have become popular over the past two to three years. As the consultation paper noted, the threshold for these instruments is as low as Rs 10 lakh to Rs 25 lakh.

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The paper said, "Given the increasing value of investments with such FOPs, as well as rising number of investors it has become necessary to consider whether it is an appropriate juncture to require registration and regulate these FOPs in order to bring about, inter-alia, regulatory oversight, common uniform standard disclosure practices, ensuring liquidity by way of listing or similar such measure, investor redressal mechanism, etc. to safeguard the interest of investors."