SEBI Board Set To Discuss Voluntary Delisting Regulations

Regarding fractional ownership platforms (FOPs), the consultation paper categorising these as micro, small, and medium real-estate investment trusts (MSM REITs) was issued earlier this year by SEBI.

Notably, the price of the listing is discovered through a reverse book-building process.

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The Securities and Exchange Board of India (SEBI) is expected to discuss revisions to the voluntary delisting norms in its meeting on Saturday. The market regulator is further anticipated to hold discussions on the rules regarding fractional real-estate ownership in the meeting on November 25, 2023. 

Earlier in the month, the Sebi chairperson, Madhabi Puri Buch noted that delisting norms would be a point of discussion in the regulator’s next meeting, reported Moneycontrol. Buch shared this while addressing FICCI’s Capital Market Conference, and stated the regulator’s process regarding the norms would be driven by data and logic and not dogma. 

At the conference, Buch noted, “There was a popular belief that we will never review the delisting norms and that we will always stay with the reverse book-building process, as many of you know we floated a consultation paper and we have got a lot of feedback and at the next Board meeting we are taking that proposal to our Board.” Earlier in August, the regulator issued a consultation paper on reviewing the voluntary delisting norms.

Notably, the price of the listing is discovered through a reverse book-building process. In the process, the public shareholders are called to tender their shares, and the discovered price is the one at which the post-offer shareholding of the acquirer, along with the people acting in concert, surpasses 90 per cent of the overall shares. 

The advisory committee of the regulator suggested that an acquirer should be permitted to give a fixed price, instead of a discovered price, under some conditions. Other suggestions in the matter included reducing the threshold for acquirers to provide a counteroffer and review the determination of the floor price. 

Regarding the fractional ownership platforms (FOPs), the consultation paper categorising these as micro, small, and medium real-estate investment trusts (MSM REITs) was issued earlier this year in May. These platforms offer investors an opportunity to own a fraction of a real estate property via pooled instruments. These have become a lucrative choice over the past two to three years. According to the consultation paper, the threshold for these instruments stands as low as Rs 10 lakh to Rs 25 lakh. 

The paper stated, “Given the increasing value of investments with such FOPs, as well as rising number of investors it has become necessary to consider whether it is an appropriate juncture to require registration and regulate these FOPs in order to bring about, inter-alia, regulatory oversight, common uniform standard disclosure practices, ensuring liquidity by way of listing or similar such measure, investor redressal mechanism, etc. to safeguard the interest of investors.”