Schemes of Arrangement by Listed Entities
Summary
This circular amends the framework for Schemes of Arrangement by listed entities to ensure stock exchanges verify compliance before referring draft schemes to SEBI. It mandates new documentation requirements, including valuation undertakings, declarations on past debt defaults, and No Objection Certificates from lenders. The annexure further establishes procedures for handling fractional entitlements and imposes penalties for misstatements.
Text
It has been decided to provide further clarifications on the processing of draft schemes filed with the stock exchanges, and make certain amendments... aimed at ensuring that the recognized stock exchanges refer draft schemes to SEBI only upon being fully convinced that the listed entity is in compliance...
This Circular shall be applicable for all the schemes filed with the stock exchanges from the date of the Circular.
The recognized stock exchanges are directed to bring the provisions of this circular to the notice of the listed companies and also to disseminate the same on their website
This circular is issued in exercise of powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Regulations 11, 37 and 94 read with Regulation 101(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Rule 19(7) of Securities Contracts (Regulation) Rules, 1957
Valuation Report as per Para (4) below; accompanied with an undertaking from the listed entity stating that no material event impacting the valuation has occurred during the intervening period of filing the scheme documents with Stock Exchange and period under consideration for valuation.
Declaration from the listed entity on any past defaults of listed debt obligations of the entities forming part of the scheme.
No Objection Certificate (NOC) from the lending scheduled commercial banks/financial institutions.
The fractional entitlements, if any, shall be aggregated and held by the trust, nominated by the Board in that behalf, who shall sell such shares in the market at such price, within a period of 90 days from the date of allotment of shares, as per the draft scheme submitted to SEBI.
The listed company shall submit to the designated stock exchange a report from its Audit Committee and the Independent Directors certifying that the listed entity has compensated the eligible shareholders. Both the reports shall be submitted within 7 days of compensating the shareholders.
The Exchange shall ensure compliance of the above and non-compliance, if any, shall be submitted to SEBI on a quarterly basis.
Any misstatement or furnishing of false information with regard to the said information shall make the listed entity liable for punitive action as per the provisions of applicable laws and regulations.
Source: SecMarx — Schemes of Arrangement by Listed Entities. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.