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

Under the SEBI (Delisting of Equity Shares) Regulations, 2021, what is the nature of delisting of a company's equity shares by a recognised stock exchange on account of the company's failure to comply with listing requirements?

It is compulsory delisting. The stock exchange itself removes the company's securities from trading on specified grounds such as non-compliance with listing requirements, rather than the promoters initiating an exit offer, as happens in voluntary delisting.

  1. AVoluntary delisting, initiated by the promoters through a reverse book building process
  2. BCompulsory delisting, carried out by the stock exchange on specified groundsCorrect
  3. CDelisting through a scheme of arrangement approved by the NCLT only
  4. DDelisting initiated by the shareholders at their own option

Explanation

Compulsory delisting is the removal of securities from a stock exchange by the exchange itself on grounds such as non-compliance with listing conditions. It is not initiated by the promoters. Voluntary delisting, by contrast, is initiated by the promoter through an exit offer and reverse book building.

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