The Securities and Exchange Board of India (Sebi) will soon issue a notification, simplifying the delisting process for Companies with less than Rs 1 crore sales, having limited number of stakeholders. Speaking at the Express Group’s Idea Exchange programme, M Damodaran, chairman, Sebi, said that these Companies would be given the first shot at simplified exits. “It is ready and we are going to notify it anytime now,” he said. However, the reverse book building process may not be followed for fixing exit prices, as it could be a time consuming process.

He added that a better way to deal with it, would be to set a price that the promoter is willing to pay, which is not a floor price but something that the process would throw up.

Once this notification is issued, the regulator would look at simplifying exit norms for other Companies with a higher turnover.

The promoters of certain Companies often want to delist if there is no trading, as they feel that there is continued value in it, while having to pay fees to the exchanges. That apart, they also have to adhere to the penal compliance.

Meanwhile, Damodaran also said that there would be co-operation between Sebi and US Securities and Exchange Commission (USSEC) to deal with cases of insider trading. He added that the USSEC has a good track record in managing to put together evidence in such instances to lead to conviction. “We haven’t had such a degree of success and therefore we are trying to learn from their experience,” he said.

He also said that sovereign wealth funds are replacing private equity as the leading investment source. The concern could be in sectors, which have no investment caps. Worldwide sovereign wealth funds are emerging as a group of investors that can cause problems and interfere with ownership structure in Companies, causing an impact.

“There is no worry as to the origin of the fund, but I am only talking about the kind of investment and whether it will impact the ownership structure in Companies in sectors that might be important,” he said.

Source : Financial Express

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