Delisting of Shares: How the Reverse Book Building Price Is Set and What Shareholders Can Do

Every few months a promoter announces it wants to take a listed company private, and the stock jumps the same morning. Then the questions start in shareholder WhatsApp groups. What price will we get? Can the promoter just pick a number? What if I don’t sell? Delisting of shares in India runs on a fairly strict rulebook from SEBI, and once you know how the price is set, most of those questions answer themselves.

This guide walks through the voluntary delisting process under the SEBI (Delisting of Equity Shares) Regulations, 2021, as amended up to September 3, 2025: how the floor price is fixed, how reverse book building discovers the exit price, when a promoter can come back with a counter-offer, the newer fixed-price route, and what happens to shareholders who do nothing. We’ll use SEBI’s own worked illustration and a couple of hypothetical numbers to keep the arithmetic honest.

What delisting of shares actually means

Delisting means a company’s shares are removed from the stock exchange, so they can no longer be bought or sold on NSE or BSE. There are two very different versions of this, and it helps to keep them apart from the start.

• Voluntary delisting: the promoter (called the “acquirer” in the regulations) offers to buy out public shareholders so the company can leave the exchange. Shareholders vote on it, and the exit price comes out of a bidding process. This is the version most of this article is about.
• Compulsory delisting: the stock exchange throws the company out, usually for serious non-compliance. Nobody asked the shareholders. Here the exchange appoints an independent valuer to fix a fair value, and the promoters have to buy shares from public holders at that value within three months of delisting, though shareholders can choose to keep their shares.

Compulsory delisting also comes with a long penalty. Under Regulation 34, the company, its whole-time directors, its promoters and companies they promote cannot access the securities market or seek a fresh listing for ten years from the date of delisting.

The steps before any price is discovered

A voluntary delisting doesn’t go straight to bidding. The board approves the proposal first. The company then needs a special resolution from shareholders within 45 days of board approval, passed through postal ballot or e-voting. There’s an important extra condition here: the resolution can be acted on only if the votes cast by public shareholders in favour are at least two times the votes cast by public shareholders against it. The promoter’s own votes can’t carry it.

After that comes in-principle approval from the stock exchange, and then the detailed public announcement and letter of offer, which disclose the floor price and the bidding dates. The acquirer also has to open an escrow account and deposit money in it, so the payout isn’t just a promise.

How the floor price is set

The floor price is the minimum at which bidding can start. The promoter doesn’t get to choose it freely. Regulation 19A says it can’t be lower than the highest of these:

1. the volume-weighted average price (VWAP) the acquirer and persons acting in concert paid for shares in the 52 weeks before the reference date;
2. the highest price they paid for any acquisition in the 26 weeks before the reference date;
3. the adjusted book value, on consolidated financials, worked out by an independent registered valuer (this one doesn’t apply to public sector undertakings);
4. for frequently traded shares, the VWAP over the 60 trading days before the reference date on the exchange with the highest trading volume;
5. for shares that aren’t frequently traded, a price set by an independent registered valuer using book value, comparable trading multiples and other customary metrics.

The reference date is the day of the initial public announcement if it’s made before the market closes, or the next trading day if it comes after hours or on a non-trading day. That detail matters more than it looks. Before the 2024 amendment, the reference date was tied to the date the exchange was notified of the board meeting. Pinning it to the announcement means the 60-day average covers trading before the news was out, so the rally that usually follows doesn’t feed into the floor.

The floor price is only where bidding starts. In reverse book building, the shareholders who bid decide where it ends.

Reverse book building: how the exit price is discovered

In a normal IPO book build, investors bid to buy and the price goes up with demand. Reverse book building flips it. Public shareholders bid the price at which they’re willing to sell, at or above the floor price. Bids can be revised upwards or withdrawn until one day before the bidding closes, but they can’t be revised downwards.

The delisting succeeds only if the acquirer’s holding, plus the shares accepted in the offer, reaches 90% of the total issued shares (after excluding a few categories such as shares behind overseas depository receipts, employee benefit trusts and certain inactive holders). Schedule II defines the discovered price as the price at which accepted bids take the acquirer to that 90% mark.

SEBI’s own illustration in Schedule II makes this concrete. Take a company where the floor price is ₹550, the acquirer holds 75%, and 15,00,000 shares are needed for a successful delisting. Since 15 lakh shares are the 15 percentage points between 75% and 90%, that’s a company with 1 crore shares in total, so public shareholders hold 25 lakh. The bids come in like this:

The cumulative column crosses 15 lakh at ₹600, so ₹600 is the discovered price. Notice what that means for the person who bid ₹550. They don’t get ₹550. If the acquirer accepts, Regulation 24 says every shareholder whose bid is accepted gets the discovered price, so the ₹550 bidder is paid ₹600 like everyone else. Bidding low doesn’t earn you a lower payout; it just makes it more likely the 90% threshold is crossed at all.

The indicative price

An acquirer can also announce an indicative price, which has to be higher than the floor price, and can revise it upwards before bidding starts. It works as a signal and a commitment. If the discovered price comes in at or below the indicative price, the acquirer is bound to accept the shares at the indicative price. If the discovered price comes in higher than the indicative price, the acquirer is free to accept it, reject it or, if the conditions below are met, make a counter-offer.

When the promoter can make a counter-offer

This is where the 2024 amendment changed things the most. Earlier, a promoter could make a counter-offer only if the bids had already taken it to 90%. Now, in a reverse book building offer, a counter-offer is allowed when two conditions hold together:

• the acquirer’s post-offer holding, along with the shares tendered, is at least 75%; and
• at least 50% of the public shareholding has been tendered.

It has to be made within two working days of the bidding closing, and the counter-offer price can’t be lower than the higher of the VWAP of the shares tendered in the book build and the indicative price, if one was given. If tendered shares took the acquirer to 90% or more, that VWAP is calculated only on the shares up to 90%. If they didn’t, it’s calculated on all the shares tendered.

SEBI’s reasoning in its July 2024 board paper was based on data. Of the 40 companies that made voluntary delisting offers between January 1, 2018 and May 31, 2024, 26 delisted successfully and 14 failed. In 11 of those 14 failures, the acquirer couldn’t even make a counter-offer because the bids hadn’t reached 90%. So a majority of public shareholders could have tendered and still seen the whole thing collapse.

A worked counter-offer example

Let’s run two hypothetical versions of SEBI’s table to see how the floor for a counter-offer works. Assume no indicative price was given.

Case 1: the bids reach 90%, but the promoter rejects ₹600. The VWAP is taken on the first 15 lakh shares only: 2.5 lakh at ₹550, 4 lakh at ₹565, 2 lakh at ₹575, 4 lakh at ₹585, 1.2 lakh at ₹595 and 1.3 lakh at ₹600. That adds up to ₹86.19 crore for 15 lakh shares, a VWAP of about ₹574.60. A counter-offer can’t go below that.

Case 2: the bidding is thinner. Suppose only the first four rows of bids arrive, 12.5 lakh shares in all. The acquirer is at 75% plus 12.5%, or 87.5%. That’s short of 90%, so there’s no discovered price, but it’s above 75%, and 12.5 lakh is exactly half of the 25 lakh public shares, so both counter-offer conditions are met. The VWAP of all tendered shares is ₹71.25 crore divided by 12.5 lakh shares, which is ₹570. The counter-offer has to be at ₹570 or more. Whether it succeeds then depends on the counter-offer still taking the acquirer to 90%.

Here’s what we’d take from this as a shareholder. The counter-offer floor is anchored to what people actually bid, not to some number the promoter likes. Low bids pull that VWAP down. High bids pull it up.

The fixed-price route

The 2024 amendment also added a second way to delist, aimed at removing the guesswork. Under Regulation 20A, the acquirer can skip reverse book building and announce a fixed delisting price, which must be at least 15% more than the floor price. Two conditions apply: this route is available only if the company’s shares are frequently traded, and the offer succeeds only if the acquirer’s holding plus the shares tendered reaches 90% at that fixed price.

Using SEBI’s illustration again, a ₹550 floor means a fixed price of at least ₹632.50. That’s higher than the ₹600 discovered in the book build above, which is the trade-off. The promoter pays a known premium up front, and shareholders know the number before deciding.

The 15% figure was a negotiated one. SEBI’s July 2024 board paper shows its Primary Market Advisory Committee had recommended a minimum premium of 20%, after looking at 103 companies that delisted successfully between January 1, 2009 and May 31, 2024. In that group, the discovered price was on average 40% above the floor price, but the median premium was only 17%. A handful of very large premiums, with the range running up to 242%, pull the average well above the typical case. The final regulation settled at 15%.

A fixed price gives up the chance of a bidding surprise in exchange for certainty, and the regulation makes the promoter pay at least 15% over the floor for it.

A separate route for government companies

An amendment effective September 3, 2025 added special provisions for public sector undertakings, other than banks, NBFCs and insurance companies. A PSU can be delisted if the government acquirer, along with other PSUs, holds at least 90% of that class of shares, shareholders pass a special resolution, and the fixed-price process is used. The floor there is the highest of the acquirer’s 52-week VWAP, its highest price in 26 weeks and a joint valuation report from two independent registered valuers, and the delisting price must be at least 15% above that floor.

What happens if you don’t tender

This is the part retail shareholders most often get wrong. Not tendering doesn’t stop a delisting if others tender enough. If the offer succeeds and you held on, Regulation 26 gives you a right to tender your shares to the acquirer for at least one year after delisting, at the same price the shares were delisted at. The acquirer can’t refuse, and the money comes out of the escrow account, which the manager to the offer can’t release for a year or until all remaining holders are paid, whichever comes first. The manager also has to advertise this exit window every quarter.

After that window, you’re holding unlisted shares. You still own a piece of the company, but there’s no exchange to sell on, and finding a buyer becomes a private matter. It’s a much weaker position than having a screen price every day.

And if the offer fails? Shares tendered are released back to the bidders, the acquirer bears the offer expenses, and it can’t make another delisting offer for six months.

What the price does around an announcement

SEBI’s board paper also looked at how these stocks traded. For the 40 companies that made offers between 2018 and May 2024, it compared four months before and after the announcement: prices rose by 28% on average, though the range ran from a 101% rise to a 14% fall, and trading volumes rose by 148% on average. That spread tells you the market treats a delisting announcement as a bet on the final price, and some of those bets go badly.

Buying after the announcement in the hope of a fat exit price means you’re betting on two things: that the offer succeeds, and that the discovered or counter-offer price beats what you paid. If the offer fails, the support from the expected buyout goes away, and the stock can give back much of its run-up.

A quick checklist when a delisting is announced

• Read the floor price and indicative price in the public announcement, and see which of the Regulation 19A parameters set the floor.
• Check whether it’s a reverse book build or a fixed-price offer. With a fixed price, the only real decision is tender or don’t.
• Look at how much the promoter already owns. The closer it is to 90%, the fewer public shares it needs.
• Note the bidding dates. Upward revisions and withdrawals close one day before bidding ends.
• If you don’t tender and the offer succeeds, mark the one-year exit window on your calendar.

Delisting is the mirror image of listing. If you want the other end of the story, our guide to IPO investing in India covers how companies come to market in the first place. A buyback of shares is the gentler cousin of a delisting, where the company buys back part of its equity but stays listed. And since promoter holdings decide so much in a delisting, our explainer on promoter pledge is useful background on reading promoter shareholding data.

For the primary text, see the consolidated SEBI (Delisting of Equity Shares) Regulations, 2021, amended up to September 3, 2025, and SEBI’s July 2024 board paper on flexibility in voluntary delisting, which has the data on past offers.

Disclaimer: This article is for educational purposes only and is not investment advice. The bid table is SEBI’s illustration from Schedule II of the Delisting Regulations; the counter-offer cases built on it are hypothetical. Regulatory details are summarised from the linked SEBI documents and may change, so check the current regulations and the offer documents of any specific delisting. Investing in stocks involves risk of loss. Please do your own research and consult a SEBI-registered investment adviser before making any investment decision.