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CS Executive · Capital Market and Securities Laws · Delisting of Equity Shares

Shreeji Textiles Ltd is listed on a recognised stock exchange. The exchange proposes to compulsorily delist its equity shares. Before passing the final delisting order, what must the exchange do under the 2021 Delisting Regulations?

The exchange must give the company a reasonable opportunity of being heard before passing a compulsory delisting order. Shareholder special resolutions and reverse book building belong to voluntary delisting, not to the exchange-initiated compulsory route, and auditor consent is not required.

  1. AGive the company a reasonable opportunity of being heardCorrect
  2. BObtain a special resolution of the company's public shareholders
  3. CWait for the promoters to make an exit offer through reverse book building
  4. DObtain the prior consent of the company's auditors

Explanation

Principles of natural justice require the exchange to give the company an opportunity of being heard through its designated committee process before delisting. A shareholder resolution and reverse book building belong to the voluntary route, so options 2 and 3 are wrong. Auditor consent has no role.

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