With an aim to protect investors’ interest, Sebi has notified a new framework prohibiting listed entities, with more than 200 non-QIB (qualified institutional buyer) holders of non-convertible debt securities, from delisting voluntarily.
Under the new rule, the listed entity will have to obtain permission from all holders of non-convertible debt securities within 15 working days of receiving the notification of delisting.
The present rule allows entities to delist by giving a prior intimation to the stock exchange about the meeting of the board of directors, where the proposal for a voluntary delisting is considered.
Unlike equity, wherein approval by a threshold majority is sufficient for approval of delisting, in the new framework, approval of 100 per cent of the debt security holders has been mandated for delisting of debt securities.
This is because, unlike equity which is a perpetual instrument, listed debt securities have a finite term to maturity.
In its notification issued
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