Reverse Book Building Process under the New Delisting Regulations, 2021

With the advent of COVID-19, the unpredictability of the stock market also continued to prevail in India with many small and big companies like Hexaware Technologies, Adani Power, Modern India Limited, Vedanta, etc. getting voluntarily delisted from the Stock Exchange. The reason for triggering voluntary delisting can be numerous other than the non-profitability of the company and therefore, the Securities and Exchange Board of India (SEBI) governs the delisting of companies under the SEBI (Delisting of Equity Shares) Regulation, 2009 which has now become the SEBI (Delisting of Equity Shares) Regulations, 2021 for providing a smooth and substantive governed process to the companies. The basic intend of SEBI on introducing a new regulation altogether was to ‘Time Bound’ the entire process of delisting of equity shares as under the erstwhile regulations, there were no proper durations of executions because of which many delisting offers have failed in the past like that of Vedanta. As a result of lack of proper time-bound durations, the offer used to delay in time which used to be followed up by a change in market conditions and eventually would result in the failure of the delisting process. Therefore, the new regulations have laid much emphasis on mandating specific time boundations for the effective functioning of the delisting process. In this article, we are going to understand the evolution and critically analyze the Reverse Book Building Mechanism as per the new Delisting Regulations of 2021 which is required to determine the discovered price of the purchase of shares to successfully delist the company.