SEBI fixed-price delisting: your exit rights explained

If a company you hold shares in is going private, SEBI now lets it offer you a fixed exit price of at least 15 percent above the floor price, instead of only the older auction method. This came in through the SEBI delisting amendment of September 2024. You can accept the fixed price or, in the auction route, help trigger a counter-offer. Knowing which route applies protects the value of your shares.

A company delisting its shares must now pick one of two routes: a fixed-price offer (a clear number, at least 15 percent over the regulator-calculated floor) or the older reverse book building auction where shareholders quote prices. As a retail holder, you tender your shares and get paid; you are not forced out below fair value.

Under the old system, only reverse book building (RBB) existed. Small shareholders often found the auction confusing and slow, and many got stuck when the process failed. Frequently traded shares now have a simpler path: the acquirer states one fixed price upfront, so you know your exit value before you decide.

SEBI introduced this through the Securities and Exchange Board of India (Delisting of Equity Shares) (Amendment) Regulations, 2024, notified on 25 September 2024.

The floor price is calculated under the regulator's formula (regulation 19A), based on past traded prices and other benchmarks. The 15 percent premium sits on top of that floor.

In the RBB route, the acquirer can make a counter-offer once its post-offer holding would reach 75 percent (reduced from the earlier 90 percent), provided at least half of the public shareholding has been tendered. This makes it easier to complete a fair counter-offer. Note: the delisting itself still succeeds only when the acquirer reaches 90 percent total shareholding. The 75 percent figure is the trigger to make a counter-offer, not the success line.

1. Read the public announcement. It states the route (fixed price or RBB), the floor price, and the offer price or floor.
2. Check the fixed price against the floor. Confirm the offer is at least 15 percent above the stated floor price.
3. Decide before the window closes. In a fixed-price offer you accept the number; in RBB you tender at or below the offer through your broker.
4. Keep your demat and bank details updated so payment is not delayed.
5. Escalate disputes to SEBI if you suspect an unfair price or process lapse.

• Confusing floor price with offer price. The floor is the base; your minimum in a fixed-price offer is 15 percent above it.
• Missing the tendering window. Once it closes, your later exit may be only at the discovered price during a residual period.
• Assuming 75 percent ends the process. It only allows a counter-offer; 90 percent is still needed for delisting to succeed.

The fixed price must be at least 15 percent more than the floor price calculated under SEBI's formula in regulation 19A. The floor reflects past traded prices and other benchmarks, and the 15 percent premium is added on top of it.

The fixed-price route is available for frequently traded shares as an alternative to reverse book building. The acquirer selects the route and discloses it in the public announcement, subject to the conditions in the 2024 amendment regulations.

In reverse book building, the acquirer may make a counter-offer once its holding would reach 75 percent, if at least 50 percent of public shareholding is tendered. This was reduced from 90 percent. Delisting still succeeds only at 90 percent total holding.

If delisting succeeds, your shares are no longer listed on the exchange. There is usually a residual window to exit at the same price afterwards. Holding unlisted shares makes selling harder, so weigh the exit offer carefully.

Raise it on SEBI's SCORES platform or the SmartODR portal, and through the merchant banker handling the offer. Keep the public announcement, your demat statement, and tendering records as evidence.

Proceeds from tendering in a delisting are a transfer of shares and attract capital gains tax. The rate depends on your holding period. Confirm your gain treatment with the current capital gains rules before filing.

• SEBI (Delisting of Equity Shares) (Amendment) Regulations, 2024, Gazette notification SEBI/LAD-NRO/GN/2024/206 dated 25 September 2024.
• SEBI portal, Securities and Exchange Board of India.

• SEBI T+0 same-day settlement on the top 500 stocks
• Demat shares missing or wrongly pledged: how to act
• Filing a SEBI SCORES or SmartODR complaint
• Capital gains tax on shares under Section 112A
• The RTI Playbook for prising open public records.

For a regulator's records, use the AI RTI Drafter and the First Appeal Builder. See the RTI Act, 2005.