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

Under the SEBI (Delisting of Equity Shares) Regulations, 2021, which of the following describes 'compulsory delisting'?

Compulsory delisting is delisting carried out by a recognised stock exchange as a penal action against a listed company for non-compliance, without the company applying. It differs from voluntary delisting, where promoters or the company initiate an exit offer through reverse book building after shareholder approval.

  1. ADelisting of a company's equity shares by a recognised stock exchange as a penal measure for non-compliance, without any application from the companyCorrect
  2. BDelisting where the promoters make an exit offer to public shareholders at a price discovered by reverse book building
  3. CDelisting of shares on the company's own application after a special resolution of its shareholders
  4. DDelisting of shares because the company has moved from one recognised stock exchange to another

Explanation

Compulsory delisting is initiated by the stock exchange itself on specified grounds, such as persistent non-compliance with listing requirements. Voluntary delisting is the route where the company or promoters apply and use reverse book building. Option 1 and option 2 describe voluntary delisting, so they are wrong.

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