9911796707
TMI BlogScheme of Arrangement under the Companies Act, 1956 – Revised requirements for the Stock Exchanges and Listed CompaniesX X X X Extracts X X X X X X X X Extracts X X X X ..... High Court under sections 391-394 or 101 of the Companies Act, 1956 ("Scheme"), the listed companies desirous of getting their equity shares listed after merger/de-merger/amalgamation etc. were required to seek an exemption from Securities and Exchange Board of India ("SEBI") from the requirements of Rule 19(2)(b) of SCRR, 1957. In terms of Rule 19(7) of SCRR, 1957, SEBI has been granting exemption to such listed companies from time to time, on a case to case basis. 4. However, in the recent past, SEBI has received applications, seeking exemption, from certain entities containing, inter alia, (a) inadequate disclosures, (b) convoluted schemes of arrangement, (c) exaggerated valuations, etc. SEBI is of the view that granting listing permission or exemption from the requirements of Rule 19(2)(b) of SCRR, 1957 based on such applications may not be in the interest of minority shareholders. At the same time, if listing permission or such an exemption is delayed or denied, it would add to the uncertainty and would deprive shareholders of an exit opportunity. 5. In order to avoid such situations, the existing requirements are being revised. The salient features of the revised requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter suitably incorporating the comments received from SEBI. Stock exchanges shall provide 'Observation Letter' to listed company within 7 days of receipt of comments from SEBI on the Draft Scheme. C. Processing of the Draft Scheme by SEBI 5.9. Upon receipt of "Objection/No-Objection" letter from the stock exchanges, SEBI shall provide its comments on the Draft Scheme to the stock exchanges. While processing the Draft Scheme, SEBI may seek clarifications from any person relevant in this regard including the listed company or the stock exchanges and may also seek an opinion from an Independent Chartered Accountant. 5.10. SEBI shall endeavour to provide its comments on the Draft Scheme to the stock exchanges within 30 days from the later of the following: a. date of receipt of satisfactory reply on clarifications, if any sought from the company by SEBI; or b. date of receipt of opinion from Independent Chartered Accountant, if sought by SEBI; or c. date of receipt of "Objection/No-Objection" letter from the stock exchanges. D. Disclosure on the Website 5.11. Immediately upon filing of the Draft Scheme with the stock exchanges under Clause 5.1 above, the listed company sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the votes cast by public shareholders in favor of the proposal amount to at least two times the number of votes cast by public shareholders against it. II. Requirements after the Scheme is Sanctioned by the Hon'ble High Court (hereinafter referred to as "Approved Scheme") 5.17. Upon sanction of the Scheme by the Hon'ble High Court, the listed company shall submit the documents mentioned in Para 2 of Part B of Annexure I to this Circular, to the stock exchanges. 5.18. The designated stock exchange shall forward its recommendations to SEBI on the documents submitted by the listed company as referred to in Clause 5.17 above. 5.19. SEBI shall endeavour to offer its comments/approval, wherever applicable, to the designated stock exchange in 30 days. 6. Validity of Observation Letter: The validity of the 'Observation Letter' of stock exchanges shall be six months from the date of issuance, within which the Scheme shall be submitted to the Hon'ble High Court. 7. Applicability: The revised requirements shall be applicable to listed companies which, on the date of this Circular, have not submitted the Scheme with the Hon'ble High Court. It is clarified that the revised requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme under sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, thereby seeking relaxation from the strict enforcement of clause (b) to sub-rule (2) of rule 19 thereof, for listing of its equity shares on a recognized stock exchange without making an initial public offer, if it satisfies the following conditions: a. The equity shares sought to be listed are proposed to be allotted by the unlisted issuer (transferee entity) to the holders of securities of a listed entity (transferor entity) pursuant to a scheme of reconstruction or amalgamation (Scheme) sanctioned by a High Court under section 391-394 of the Companies Act, 1956; b. At least twenty five per cent of the post-scheme paid up share capital of the transferee entity shall comprise of shares allotted to the public shareholders in the transferor entity; c. The transferee entity will not issue/ reissue any shares, not covered under the Draft Scheme; d. As on date of application, there are no outstanding warrants/ instruments/ agreements which give right to any person to take the equity shares in the transferee entity at any future date. If there are such instruments stipulated in the Draft Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of a listed entity (transferor entity); and d. The share certificates have been dispatched to the allottees pursuant to the Scheme or their names have been entered as beneficial owner in the records of the depositories. 2. Upon sanction of the Scheme by the Hon'ble High Court, the listed company shall submit to the stock exchanges: a. Copy of the High Court approved Scheme; b. Result of voting by shareholders for approving the Scheme; c. Statement explaining changes, if any, and reasons for such changes carried out in the Approved Scheme vis-à-vis the Draft Scheme d. Status of compliance with the Observation Letter/s of the stock exchanges e. The application seeking exemption from Rule 19(2)(b) of SCRR, 1957, wherever applicable; and f. Complaints Report as per Annexure II of this Circular. 3. In case of a hiving off of a division of a listed entity (say, "entity A") and its merger with a newly formed or existing unlisted issuer (say, "entity B") there will not be any additional lock-in, if the paid-up share capital of the unlisted issuer 'B' is only to the extent of requirement for incorporation purposes 4. In case of merger where the paid-up sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements; l. Outstanding litigations and defaults of the transferee entity, promoters, directors or any of the group companies; m. Particulars of high, low and average prices of the shares of the listed transferor entity during the preceding three years; n. Any material development after the date of the balance sheet; and o. Such other information as may be specified by the Board from time to time. PART C Application by a Listed Issuer for Listing of Equity Shares with Differential Rights as to Dividend, Voting or Otherwise 1. A listed issuer desirous of listing of its equity shares with differential rights as to dividend, voting or otherwise, without making an initial public offer of such equity shares, may make an application to the Board under sub-rule (7) of rule 19 of the SCRR seeking relaxation from strict enforcement of clause (b) to sub-rule (2) of rule 19 thereof if it satisfies the following conditions: a. such equity shares are issued to all the existing shareholders as on record date by way of rights or bonus issue; b. the issuer is in compliance with the conditions of minimum public shareholding requirement stipulated in the equity listing agreement, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
