Sebi to relax delisting norms on merger with listed parent

New Delhi: Capital markets regulator Sebi on Monday proposed to exempt a listed company from following delisting regulations in case of its merger with a listed holding firm, if the shareholders of the subsidiary entity gets shares of the parent.

Floating a consultation paper for amendments to the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 for schemes of arrangements, the regulator said this would apply to cases where a listed holding company is merging its listed subsidiary and the subsidiary is desirous of getting delisted without following the provisions of delisting regulations.

Sebi said there are cases of listed companies with listed subsidiaries and equity shares of both the companies being actively traded on stock exchanges.

"In a number of these cases, both the listed subsidiary and its listed parent company are in the same or similar business, with significant synergies by working together and creating significant incremental shareholder value for both companies," Sebi said.

While a full merger of a listed subsidiary with its listed parent entity would help achieve the intended synergies, it may not be favourable for some reasons.