Guide · Market structure · Updated 2026-09-23

A delisting price is the ask of the share that completes 90 per cent, and since September 2024 the acquirer has two ways to answer it

Delisting headlines carry a number, the floor or the indicative price, and read it as the price at which the company goes private. It is the least the acquirer may pay. The price is set by the shareholders' own asks, at the one ask that carries the acquirer over a 90 per cent line, and a holder with enough shares can move it.

Most explanations also predate 25 September 2024, when the SEBI (Delisting of Equity Shares) (Amendment) Regulations, 2024 gave the floor its own formula, let a counter offer rescue a short book and priced it off the bids, and added a fixed price route. A 2025 amendment added a public sector route. Every rule below is stated on the regulations as SEBI has consolidated them to 3 September 2025.

The acquirer names a floor, and the holders name the price

Delisting from every exchange requires the acquirer, normally the promoter group, to give all public shareholders an exit (regulation 7). After its initial public announcement, the company's board must approve within 21 days, and shareholders must pass a special resolution within 45 days after that, which counts only if the public shareholders' votes in favour are at least twice their votes against (regulations 8 to 11). The acquirer may not have sold shares in the six months before the announcement, may not sell during the delisting period, and may not use the company's money to pay for the exit (regulations 4 and 30).

The vote permits the offer; it does not deliver it. After the exchange's in-principle approval, the bid period opens within seven working days of the detailed public announcement and runs for five (regulation 17(1)). Holders tender through a broker in the exchange's acquisition window at any price not below the floor, with a lien marked on the shares in their demat account (SEBI circular SEBI/HO/CFD/DCR-III/CIR/P/2021/615). Letters of offer allow a bid to be withdrawn or raised until the day before the close, never lowered. The exchange publishes the cumulative quantity tendered, and SEBI's June 2024 board memorandum notes that category-wise bidding details are not disseminated. The vote counts votes cast; the tender counts shares at or below one price.

The floor is the highest of five references, fixed on the announcement day

Before 25 September 2024, and for offers acquirers chose to announce under the old text until 24 November 2024, the floor was borrowed from regulation 8 of the takeover regulations, the formula behind the open offer price. Regulation 19A now defines it separately and adds a balance sheet test the takeover code does not have.

Adjusted book value is A + B + C + D less L on consolidated financials, set by an independent registered valuer: book assets other than jewellery, art, securities and property; jewellery and art at open market value; securities at the exchange price if frequently traded and at a valuer's fair value if not; property at its stamp duty value; less liabilities other than equity, reserves, unascertained provisions and contingent liabilities. It does not apply to public sector undertakings. Here it is 309.00, a formality beside the 400 market reference. With a stamp duty value of 2,450 crore on the land instead of 1,240 crore, it is 430, and the floor rises to 430 before a bid is placed.

The reference date moved too. It is now the announcement day if the announcement comes during market hours, and the next trading day if it comes after (regulation 19A(2)); the windows cover the days immediately before it. It used to be the date the exchanges had to be told of the board meeting, which came later, and the memorandum flagged the risk of unusual trading in between. It also measured what announcements do: across 40 delisting offers from January 2018 to May 2024, prices averaged 28 per cent higher in the four months after the announcement than in the four months before. The floor is now set on the undisturbed price.

Above the floor the acquirer may name an indicative price, which it may raise before bidding (regulation 20(4) and (5)). It binds: if the book clears at or below it, the acquirer must buy every accepted share at the indicative price (regulation 22(1) and (2)). Only a discovered price above it leaves the acquirer free to accept, pay more, reject or counter.

Ninety per cent of the shares that can answer

Regulation 21(a) declares success when the acquirer's holding plus the shares accepted at the price reaches 90 per cent of the issued shares, leaving out shares held against overseas depository receipts, shares in an employee benefit trust, and inactive holders' shares: vanishing and struck off companies, the Investor Education and Protection Fund and the unclaimed suspense account, as certified by a peer review company secretary at the date of in-principle approval.

On an illustrative company with 10 crore shares, a promoter group at 72 per cent and 15 lakh inactive shares, the counted base is 9,85,00,000 and the book must supply 1,66,50,000 shares at or below the price: 62.83 per cent of the 2,65,00,000 public shares that can tender. Without the exclusion it would need 1,80,00,000; each excluded share lowers the requirement by nine tenths of a share. Read from the holders' side the test is a veto: if more than 10 per cent of the counted shares stay out, 98,50,000 here or 37.2 per cent of the float that can tender, the offer fails.

The higher the promoter's starting stake, the smaller the share of the float that must tender and the larger the share that can block. The lower line is the counter offer threshold added in 2024, flat at half the float above a 50 per cent stake and well below the success line.

The discovered price is the ask of the marginal share

Schedule II paragraph 13 makes the discovered price the price at which accepted bids take the acquirer to 90 per cent. Sort the asks from cheapest, add shares up the list, and stop where the total meets the requirement. Every ask at or below that price is accepted at that price and none above it is; letters of offer word it as every share tendered up to and equal to the exit price, bought at the exit price. The rule as coded for this page reproduces the regulation's own worked example in paragraph 14: a floor of 550, 15 lakh shares needed, a discovered price of 600.

The illustrative book holds 2,10,00,000 shares at 16 prices, including one block of 30 lakh shares, 3 per cent of the company, asking 460.

It crosses at 490, 22.5 per cent over the floor. All 1,70,00,000 shares asked at or below 490 are paid 490, including the 38 lakh asked at the floor, and the acquirer ends at 90.36 per cent of the counted shares, only 89.0 per cent of all shares; without the exclusion the crossing would be 500. The 40,00,000 shares asked above 490 are released, and 55,00,000 were never tendered.

Because the price is uniform, a small holder's ask is almost never the marginal one: asking the floor buys certainty of being counted, not a lower price. The ask that matters stands at the requirement, and a holder large enough to stand there alone moves the price for everyone. With an indicative price of 440, a 490 book does not bind the acquirer.

A 3 per cent block moves the price for everyone, up to a ceiling the rest of the book sets

Between 490 and 550 the block is pivotal: the other asks at or below 490 total 1,40,00,000 against 1,66,50,000 needed, so whatever it asks becomes the price. At 550 the others alone reach 1,68,00,000, so a higher ask, or no tender at all, leaves the block outside and the price stops at 550, a ceiling set by the depth of everyone else's asks. Moving from 490 to 550 raises the most the offer can cost from 1,372 crore rupees to 1,540 crore. That is the leverage the mechanism hands a minority, and the reason it is called reverse: the sellers make the book.

The exit window makes asking high cheap. Regulation 26 lets holders whose shares were not tendered, or not accepted, sell at the same price for at least a year after delisting, so a holder who overshoots still gets the exit price, later and off the exchange. What disciplines the book is failure: a rejected price returns every share, bars another delisting offer for six months (regulation 23), and leaves a screen price that rose on the announcement with no offer under it.

Since September 2024 a short book can be answered with a counter offer

As first notified in 2021, a counter offer could follow only a discovered price, which means a book already at 90 per cent, and could not be priced below book value certified by the manager to the offer. The memorandum counted the cost: of 40 offers from January 2018 to May 2024, 14 failed, and in 11 of them the acquirer had no counter offer to make.

Regulation 22(4) now permits one in a reverse book building, within two working days of the close, if the acquirer plus every share tendered at any ask reaches 75 per cent and at least half the public shareholding has tendered. Regulation 22(5) prices it at no less than the higher of the indicative price and the volume weighted average tendered ask, taken over all tendered shares if the total stays below 90 per cent and over the shares up to 90 per cent if it does not. It still succeeds only at 90 per cent.

In case A the block and the holders at 500 and 525 stay out, and no ask reaches 90 per cent. The minimum counter price is 459.13, the average of every ask rounded up to the paisa, including four lakh shares asking 800. Had they asked 1,200 it would be 469.13: 0.4 per cent of the company lifts the minimum under every share by 10 rupees. The memorandum expected the average to even out abnormal bids. It dilutes them.

In case B the block asks 800 and eight lakh shares move from 550 to 700, so the book reaches 90 per cent only at 650. The acquirer rejects it and counters at 455, against a minimum of 450.67, the average of the cheapest 1,66,50,000 asks. Letters of offer then treat every share tendered and not withdrawn as tendered into the counter offer at the counter price, whatever it asked, and Schedule IV allows ten working days from the counter announcement to withdraw. The block that asked 800 sells at 455 unless it acts. The new bid period opens within seven working days of that announcement and runs for up to five.

The fixed price route trades discovery for one yes or no

Regulation 20A lets the acquirer skip the book and name one price, at least 15 per cent above the floor, which each holder takes or leaves. It is available only for frequently traded shares, those whose traded turnover in the twelve calendar months before the month of the announcement was at least 10 per cent of the shares (takeover regulation 2(1)(j)). The acquirer must buy if it reaches 90 per cent at that price. There is no counter offer, because regulation 22(4) is confined to reverse book building.

The minimum was set against the auction's own record. Across 103 successful delistings from 2009 to May 2024 the median premium of the discovered price over the floor was 17 per cent; the advisory committee recommended a 20 per cent minimum, and the regulation says 15, a minimum rather than an estimate of what clears. On the illustrative book it is 460, at which 1,41,00,000 shares would accept if every ask were a true reservation price, short of the 1,66,50,000 needed. The lowest fixed price that clears is 490, or 540 if the block holds out for 540. A guess that is too low fails and bars a new offer for six months; one that is too high pays every accepted share the excess. A block can no longer name the price, only refuse it.

The 2025 amendment added a fixed price route with no tender test at all. Regulation 38B lets a public sector undertaking other than a bank, NBFC or insurer delist where the acquirer and other public sector undertakings already hold 90 per cent, at a price at least 15 per cent above a floor that replaces the market price with a joint report by two independent registered valuers. If the company is struck off within thirty days after the first anniversary of delisting, what is owed to holders who never tendered goes to an account of the designated stock exchange, claimable for seven years, and then to the Investor Education and Protection Fund. Two further routes skip the book: an investment holding company can hand the public its listed holdings and cash and cancel their shares through a scheme under regulation 38A, closer to a demerger than to a tender, and a new acquirer can attach a delisting to an open offer under takeover regulation 5A.

The shareholder who does not tender

Regulation 26 gives every remaining public holder, whether the shares were never tendered or were asked above the exit price, the right to sell to the acquirer at the same price for at least one year from delisting, paid from escrow held back for the purpose, with quarterly advertisements, letters and progress reports to the exchange under regulation 27. It is a right to sell at a fixed price, with no upside. Letters of offer describe the window sale as a sale off the exchange, without securities transaction tax, of shares that are by then unlisted, and taxed differently from the tender.

After the window the share has no screen price, the company is outside the listing regulations, and relisting cannot be sought for three years, and then only as a fresh listing (regulation 40). Any later exit comes on terms the controller proposes. Section 236 of the Companies Act 2013 provides for an acquirer holding 90 per cent or more to offer to buy out the rest at a registered valuer's price; the other route is a reduction of capital.

On 10 March 2026 the Supreme Court upheld a selective reduction of capital under section 66 that cancelled the shares of the individual holders, about 1.09 per cent of the capital, of a company delisted in 1999 to 2000 that had paid no dividend since. The valuation applied a discount for lack of marketability of at least 25 per cent, which the court held the statute does not restrict; about three quarters of the affected individuals who voted had approved, and those who abstained were treated as leaving the choice to those who voted. The illiquidity a delisting creates can be priced against the holder who stayed. A compulsory delisting runs the other way: a valuer appointed by the exchange sets a fair value that the promoters must pay within three months, holders may keep their shares, and the company and its promoters are kept out of the market for ten years (regulations 33 and 34).

The gap between the floor and the discovered price is a signal, and both sides are playing it

The premium prices the share that completes 90 per cent against a floor built from past prices, so a large one points to a stale floor or a concentrated margin, not to a verdict on value. Both sides shape it. The acquirer picks the announcement date against its own purchase windows and the 60 day window, and anchors the book with an indicative price. Holders bid knowing the exit window protects a high ask. The regulator's memorandum names one likely reason for the rise in price and volume after announcements: a book open to speculative bidding, at times by a group of bidders.

The screen during the offer mixes two unknowns. With D the exit price the market expects, q the chance the offer succeeds and F the price if it fails, the screen S = qD + (1 − q)F. An illustrative screen of 470 with a fallback of 395 implies a 78.9 per cent chance of success if the market expects 490, 60.0 per cent at 520 and 48.4 per cent at 550. One price cannot say both how much and how likely.

Where the reading goes wrong

Reading the floor as the price. It is the least the acquirer may pay.

Asking low to be safe, or high to be clever. Neither changes what an accepted share is paid. What is at stake is whether the offer succeeds.

Using an explainer written before 25 September 2024. Its floor, its counter offer and its list of routes are out of date.

Leaving a tender in place through a counter offer. That is acceptance at the counter price.

Treating the two to one vote as the test. It permits the offer; the 90 per cent decides it.

Scoring a delisted name as a loss in a backtest. In SEBI's record 79 of 103 successful delistings paid a premium over the floor, and for a frequently traded share the floor is never below the recent market average. Survivorship bias, measured shows what scoring such exits as losses does to a backtest.

What reverse book building is actually for

It prices a compulsory change in what a share is: saleable to anyone on any trading day before, to the acquirer for a year after, and on someone else's terms after that. Reverse book building makes the acquirer pay for that change at a price the holders set, under one discipline, that the acquirer will accept it. The 2024 amendment kept the bargain and gave the acquirer two answers to it; the 2025 amendment removed it for public sector undertakings already 90 per cent in public sector hands. Reading an offer as floor, thresholds and book before headline is the discipline the curriculum is built to install.