SEBI Proposes PSU Delisting Norms for 90% Promoter Holding

Consultation Paper; dated: 06.05.2025

1. Introduction

The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing a dedicated framework for the voluntary delisting of Public Sector Undertakings (PSUs) where the promoter shareholding is 90% or more. This proposal aims to address the unique characteristics and challenges involved in the delisting process of government-owned entities.

2. Key Proposal Highlights

Under the proposed framework, SEBI has outlined the following key changes –

• Eligibility Based on Promoter Holding – The framework will apply to PSUs with promoter shareholding of 90% or more, thereby differentiating them from private sector entities and accommodating their distinct ownership structures.

• Fixed Price Delisting Mechanism – It has been proposed that eligible PSUs may opt for delisting through a fixed price route, regardless of whether their shares are classified as frequently traded or infrequently traded. This is a departure from the current reverse book-building process which is typically applicable to frequently traded shares.

3. Rationale for a Separate Framework

The move to establish a separate delisting regime for PSUs is driven by the following considerations –

• To simplify the delisting process for government-owned entities
• To provide regulatory clarity and procedural efficiency
• To facilitate strategic disinvestment initiatives undertaken by the Government

4. Invitation for Public Comments

SEBI has invited stakeholder and public feedback on the proposed framework.
The last date to submit comments is 27th May 2025.

5. Conclusion

This consultation paper signals SEBI’s intent to create a more flexible and context-specific approach for PSU delisting. If implemented, the proposed framework could significantly ease the exit process for the Government in its disinvestment strategy, while maintaining investor safeguards.

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