SEBI Amends Delisting Regulations; New Norms For PSU Equity Shares

Notification No. SEBI/LAD-NRO/GN/2025/257; Dated: 01.09.2025

1. Introduction of New Regulation for PSU Delisting

SEBI has introduced the SEBI (Delisting of Equity Shares) (Amendment) Regulations, 2025, which incorporates a new regulation 38B specifically addressing the delisting of equity shares of Public Sector Undertakings (PSUs). This provision excludes banks, NBFCs, and insurance companies from its purview. The regulation lays down specific conditions under which PSUs may be delisted from all recognised stock exchanges, ensuring transparency and safeguarding minority shareholder interests.

2. Key Conditions for PSU Delisting

For a PSU to delist its equity shares, certain mandatory conditions must be fulfilled. Firstly, the aggregate shareholding of the acquirer, along with other PSUs, must be at least 90% of the total issued shares of that class. Secondly, shareholder approval must be obtained via a special resolution through postal ballot or e-voting. Additionally, the delisting process must follow the fixed-price method, rather than book-building. Importantly, the floor price for delisting must be determined using valuation parameters and must not be less than the highest of three benchmarks: (a) volume-weighted average price paid in the last 52 weeks, (b) the highest price paid in the last 26 weeks, or (c) the joint valuation report from two independent valuers.

3. Pricing Safeguards for Fair Valuation

To further protect investor interests, SEBI mandates that the delisting price must be at least 15% higher than the floor price. This provision ensures that shareholders receive a fair exit value and prevents undervaluation of PSU shares during delisting. The valuation process takes into account multiple approaches, including book value, adjusted book value, income approach, and industry benchmarks, ensuring that the pricing reflects the true worth of the company. These pricing safeguards are critical in maintaining investor trust in PSU delisting exercises.

4. Post-Delisting and Strike-off Provisions

In cases where a delisted PSU subsequently undertakes voluntary strike-off, additional provisions apply if the strike-off occurs after one year from the date of delisting but within 30 days of the expiry of that one year. The amount payable to remaining public shareholders who did not tender their shares must be transferred to the designated stock exchange’s specified account and held for seven years for investor claims. After this period, unclaimed amounts are transferred to the Investor Education and Protection Fund (IEPF) under the Companies Act, 2013, or alternatively to the Investor Protection and Education Fund (IPEF) of SEBI. Even after such transfer, investors retain the right to claim their dues through the designated stock exchange.

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