Market regulator, the Security and Exchange Board of India has amended norms related to delisting for companies, making it tougher for companies to delist from stock exchanges.

Firms can be delisted only if promoters buy 50 per cent stake through open offer or hike their stake, giving a chance to stakeholders to exit. The regulator, in a notification, has said that no firm can be delisted within three years through a buyback or a preferential allotment of equity.

The move is aimed to bring transparency in the delisting system. Companies need to offer for delisting within 55 working days from the date of the public announcement and public shareholders must be provided with at least three working days in order to tender their bids.

The floor price of the offer should not be less than the average of the weekly high and low closing prices of the shares within 26 weeks. However, promoters are free to reject the offer without any approval from the regulator.

Promoters are not allowed to appoint any of their associates as merchant bankers for facilitating the exit opportunity and the book building procedure needs to be used to determine offer price.

RippleWave Equity Director, Mehul Savla, said, "While the new norms have moved the delisting threshold higher at 90% or more, the norms have at least provided much-needed clarity by specifying a uniform mechanism instead of a vague, uncertain requirement between 75% and 90%, based on the listing agreement, which could keep varying every year for companies."