A going-private transaction is the acquisition of a listed company by an unlisted entity, resulting in the delisting of the listed company. The transaction can be structured as a scheme of arrangement under Section 230, in which the unlisted entity merges into the listed entity or acquires the listed entity’s shares and cancels them.
The Structure
In a going-private transaction, the unlisted entity is the acquirer, and the listed entity is the target. The unlisted entity’s shareholders receive shares of the listed entity, or the listed entity’s public shareholders receive a cash exit. The transaction results in the listed entity becoming a wholly owned subsidiary of the unlisted entity, or in the merger of the listed entity into the unlisted entity.
The Exit Opportunity
The public shareholders of the listed entity must be given an exit opportunity at a fair price. The exit price is determined in accordance with the SEBI Delisting Regulations or the valuation report, and the public shareholders must approve the scheme by the requisite majority. The NCLT examines whether the exit opportunity is fair and whether the public shareholders have been informed of their rights.
The SEBI Overlay
The going-private transaction must comply with the SEBI Delisting Regulations, the Takeover Code, and the LODR. The delisting route under Regulation 37 may be available where the conditions are satisfied, and the open offer obligations may be triggered. The listed entity must obtain the stock exchange’s no-objection certificate and the SEBI’s observation letter before the NCLT considers the scheme.
A technically sound going-private transaction provides a fair exit to the public shareholders, complies with the SEBI regulations, and is supported by a valuation report and a fairness opinion.
Call to Action
Anuj Desai & Associates advises companies on going-private transactions—from the exit opportunity and the valuation to the SEBI delisting interface and the NCLT process. If you are considering a going-private transaction, we can help you structure it.
📧 office@anujdesaiassociates.com
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