Norms for Scheme of Arrangement by unlisted Stock Exchanges, Clearing Corporations and Depositories

SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/45 · 2023-03-28 · SEBI Market Regulation Department

Summary

This SEBI circular establishes a regulatory framework for schemes of arrangement involving unlisted Market Infrastructure Institutions (MIIs). It mandates that unlisted MIIs file draft schemes with SEBI to obtain an observation or no-objection letter before approaching any Court or Tribunal. The document outlines specific submission requirements, fee structures, processing timelines, and validity periods for such regulatory approvals.

Text

The unlisted MII desirous of undertaking a scheme of arrangement... shall file the draft scheme of arrangement along with a non-refundable fee with SEBI for obtaining the observation letter or no-objection letter, before filing such scheme with any Court or Tribunal...

The unlisted MII shall pay a fee to SEBI at the rate of 0.1% of the paid-up share capital of the unlisted or transferee or resulting company, whichever is higher, post sanction of the proposed scheme, subject to a cap of INR 5,00,000.

The provisions may not apply to schemes which solely provide for merger of a wholly owned subsidiary or its division with the parent company. However, such draft schemes shall be filed with SEBI for the purpose of disclosures and the same shall be disseminated on the websites of the unlisted MII.

The Draft Scheme of Arrangement or Amalgamation or Merger or Demerger or Reconstruction or Reduction of Capital, etc.

Approval of the governing board of the unlisted MII for the proposed Scheme.

Valuation Report provided by an independent registered valuer, accompanied with an undertaking from the unlisted MII stating that no material event impacting the valuation has occurred during the last 6 months.

Report from the Audit Committee recommending the draft Scheme, taking into consideration, inter-alia, the Valuation Report, and also having comments on the Need for the Scheme, Rationale, Synergies, Impact on shareholders, and Cost benefit analysis.

Fairness opinion on valuation of assets or shares done by the valuer for the unlisted MII shall be taken from an independent SEBI registered Merchant Banker.

Shareholding pattern of the unlisted MII pre and post the Scheme.

Audited financials of last 3 years (financials not being more than 6 months old) of unlisted entities.

Auditor’s Certificate stating that the accounting treatment contained in the Scheme is in compliance with all the Accounting Standards specified by the Central Government under Section 133 of the Companies Act, 2013 read with the rules framed thereunder or the Accounting Standards issued by ICAI, as applicable, and other generally accepted accounting principles.

Declaration from the unlisted MII on any past defaults of debt obligations (including listed debt, if any) of the entities forming part of the Scheme.

Source: SecMarx — Norms for Scheme of Arrangement by unlisted Stock Exchanges, Clearing Corporations and Depositories. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.