Master Circular on Scheme of Arrangement and Relaxation under Rule 19(7)
Summary
This part introduces the Master Circular consolidating SEBI's requirements for schemes of arrangement and relaxations under SCRR Rule 19(7). It establishes that the circular compiles operational circulars, with specific circular content prevailing in case of inconsistency. The preliminary section outlines obligations under Listing Regulations and specifies fee payments and pricing rules for share issuances. This section outlines specific documentation requirements for schemes of arrangement, including shareholding patterns, financials, and compliance reports. It establishes conditions for mergers involving unlisted entities, such as minimum public shareholding thresholds and valuation report exemptions. Additionally, it mandates auditor certificates for accounting compliance and procedures for reporting complaints and unpaid dues to stock exchanges. This section mandates the disclosure of draft schemes and observation letters on the listed entity's website. It requires specific disclosures in shareholder notices, including fairness opinions and capital structure details, alongside uploading compliance reports. Furthermore, it establishes strict e-voting requirements for public shar
Text
In order to enable the users to have access to the applicable circulars at one place, Master Circular in respect of schemes of arrangement has been prepared.
This Master Circular is a compilation of relevant and updated circulars issued by SEBI which deal with schemes of arrangement and which are operational as on date of this circular.
In case of any inconsistency between the Master Circular and the applicable circulars, the content of the relevant circular shall prevail.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “listing regulations”) place obligations with respect to Scheme of Arrangement on Listed Entities and Stock Exchange(s) in Regulation 11, 37 and 94.
Regulation 11 of the listing regulations, inter-alia, provides that any scheme of arrangement / amalgamation / merger / reconstruction / reduction of capital etc. to be presented to any Court or Tribunal does not in any way violate, override or limit the provisions of securities laws or requirements of the Stock Exchanges.
Regulation 37 of listing regulations provides that the listed entities desirous of undertaking scheme of arrangement or involved in a scheme of arrangement shall file the draft scheme with Stock Exchange(s) for obtaining Observation Letter or No-objection Letter, before filing such scheme with any court or Tribunal.
Regulation 94 of the listing regulations requires Stock Exchanges to forward such draft schemes to SEBI in the manner prescribed by SEBI.
Sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as “the SCRR”) provides that Securities and Exchange Board of India (SEBI) may, at its own discretion or on the recommendation of a recognized Stock Exchange, waive or relax the strict enforcement of any or all of the requirements with respect to listing prescribed by these rules.
The Provisions of this circular shall not apply to schemes which solely provide for merger of a wholly owned subsidiary or its division with the parent company.
The issuance of shares under schemes in case of allotment of shares only to a select group of shareholders or shareholders of unlisted companies pursuant to such schemes shall follow the pricing provisions of Chapter V of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018...
It is clarified that the ‘relevant date’ for the purpose of computing pricing shall be the date of Board meeting in which the scheme is approved.
The listed entity shall pay a fee to SEBI at the rate of 0.1% of the paid-up share capital of the listed/ transferee / resulting company, whichever is higher, post sanction of the proposed scheme, subject to a cap of ` 5,00,000.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Master Circular on Scheme of Arrangement and Relaxation under Rule 19(7). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.