Procedure for Exit Route option
- ELCs shall file the 'Letter of Intent' duly filled in indicating the option selected within 3 months from the date of SEBI circular i.e. October 10, 2016. The letter of intent shall be accompanied by Board resolution. If the ELC does not submit the letter of intent, Exchange will initiate punitive action as prescribed in the October 10, 2016 circular.
- Along with the above, ELC shall submit Plan of action containing the minimum details provided in Annexure - A. Additionally, ELC shall provide following documents to NSE :
a. An Undertaking executed by the promoter assuring to - make the payment to the investors as per the value determined by Independent valuer - redress all the grievances of all the remaining public shareholders by the promoter/acquirer of the company pursuant to removal of the name of the company from the Dissemination Board of the Exchange Format of the undertaking is enclosed as Annexure-B.
b. Details of the Promoters / Directors / KMPs and details of public shareholders as on the date of appointment of valuer as per the format mentioned in Annexure-C.
c. Latest Annual Returns filed with ROC.
- NSE shall host on the website list of companies who have submitted the above mentioned documents along with the plan of action.
- The promoters of ELCs shall appoint the 'Independent Valuer' from the list of valuer empaneled and intimate the date of appointment to NSE. List of empaneled valuers is hosted on NSE Website in the path: https://www.nseindia.com/invest/exit-option-for-share-holders-security-information
- ELC shall obtain the Valuation Report issued by the Empanelled Valuer and file a copy of the same with the NSE alongwith the Certificate from Valuer Certificate from Value.
- ELC shall file a copy of Public announcement made by the promoter of the Company in at least one national daily with wide circulation, one regional language newspaper of the region where the exited stock exchange was located and the website of the designated stock exchanges. The announcement shall contain a declaration about the liability of the promoter to acquire shares of the shareholders, who have not offered their shares under exit offer up to a period of one year from the completion of the offer at the same price determined by a valuer.
- ELC shall file a copy of the advertisement published in the newspapers with NSE regarding a reminder for the closure of the Exit Offer.
- Promoters of ELC shall execute a bank guarantee in favour of NSE with Scheduled Commercial Bank or open Escrow Account in favour of Independent valuer with Scheduled Commercial Bank for the total amount of money to be paid to public shareholders (shareholders other than promoters and promoter group) determined in accordance with the valuation report.
In case promoters of ELC execute bank guarantee in favour of NSE with Scheduled Commercial Bank, the expiry date of the bank guarantee shall be up to one year from the closure date of Exit Offer mentioned in public announcement. Bank guarantee shall not be released to the promoters unless all the payments are made in respect of the shares tendered for the aforesaid period of one year. Hence, promoters shall ensure timely renewal of the bank guarantee.
In the alternative, if promoters of ELC open Escrow Account in favour of Independent valuer with Scheduled Commercial Bank and deposit therein the total estimated amount of consideration on the basis of exit price determined by independent valuer and number of outstanding shares held by public shareholders, such amount in the escrow account shall not be released to the promoters unless all the payments are made in respect of shares tendered for the period of one year from the date of closure of Exit Offer mentioned in public announcement.
For opening/managing the Escrow account Merchant Banker shall provide following documents to the Designated Stock Exchange:
1. Copy of Board resolution for opening and operating escrow account.
2. Copy of Tripartite Agreement between - Merchant bankers, Promoter and Scheduled Commercial Bank.
3. Merchant banker shall submit to Designated Stock Exchange Quarterly certification giving the following:
On the Letter Head of Merchant Banker
Name of the Company:
Statement for the period ended:
Particulars No of shareholders No. of shares Public shareholdings eligible for exit options as on (date of valuation report) Tendered shares under Exit option Shares eligible for Exit options but not tendered Particulars Rs Money deposited in Escrow account Payment made Payment made Balance available in Escrow Account
For Merchant Banker
The promoter shall acquire the shares of the shareholders, who have offered their shares under exit offer and up to a period of one year from the completion of the offer at the same price determined by the valuer.
4. Merchant bankers shall provide the following undertaking to Designated Stock Exchange:
"I /We undertake that all money deposited in Escrow Account will be used for payment to shareholders eligible to opt for exit option and the balance in the escrow account will be held for a period of not less than one year, to be used for payment to only eligible shareholder who tender share under the exit option."
- ELC shall complete the offer and make the payment to all the public shareholders within 75 working days.
- ELC shall provide Certificate signed by the Promoter/s about the completion of process mentioning details of the shares tendered by public shareholders during the offer, payment made / outstanding if any, and shares not tendered by the public shareholders despite efforts taken by the company in Annexure -D within 5 days from the completion of the payment to public shareholders who have tendered the shares in the exit offer.
- In case ELCs fulfill all the above mentioned criteria, ELC shall be removed from Dissemination Board.
- In case ELC fails to pay the amount to all / any of the shareholders as per the valuation report, NSE shall invoke the bank guarantee and remit the proceeds to shareholders as per the shareholder's details submitted by ELC before removing the ELC from the Dissemination Board.
- If the ELC does not fulfill all the above mentioned criteria within the specified time period, Exchange will initiate punitive action as prescribed in the October 10, 2016 circular.
- In case the ELCs have already followed the above process before the enforcement of the Circular, the Company shall be removed from the Dissemination Board subject to ELC producing all the above documents to NSE within 3 months from the date of SEBI circular i.e October 10, 2016.
- ELC shall provide certificate signed by Promoter/s about the completion of the process mentioning details of the public shareholders tendered the shares during the offer / till the completion of one year from the offer, payment made/ outstanding if any and shareholders who have not tendered the shares after one year from the completion of the offer in Annexure -D within 5 days from the end of one year after the completion of the offer. In case ELC fails to pay the amount to all / any of the shareholders as per the valuation report, NSE shall invoke the bank guarantee and remit the proceeds to shareholders as per the shareholder's details submitted by ELC.
Companies in DB got listed on other Nationwide Stock Exchange:
In case ELC has already listed on the other Nationwide Stock Exchanges, ELC shall produce the following certificate to NSE.
Approval Letter from the Nationwide Stock Exchange where the ELC is listed
In case ELCs fulfill all the above mentioned criteria, ELC shall be removed from Dissemination Board.