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 ..... tion being sanctioned by the Hon ble 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in Clause 5.10 below, shall issue Observation Letter to the listed company after 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to such resolution. The Scheme shall also provide that the special resolution shall be acted upon only 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, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part D Application by a Listed Issuer for Listing of Warrants Offered Along With Non Convertible Debentures (NCDs) Part E Miscellaneous Annexure II Format for Complaints Report ANNEXURE I PART A Requirements for Listed Companies While Submitting Draft Scheme of Arrangement 1. A listed issuer may submit the Draft Scheme 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, pursuant to Part A of this Circular if it satisfies the following conditions: a. Observation Letter has been issued by the stock exchanges to the Draft Scheme; b. The listing of the equity shares of the transferee entity is in terms of the Scheme sanctioned by the Hon ble High Court or its order whereby the Scheme has been sanctioned; c. The equity shares sought to be listed have been allotted by the unlisted issuer (transferee entity) to the holders of securities 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- -vis the Draft Scheme d. Status of compliance with the Observation Letter/s of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualifications, experience, address; g. Business and its management; h. Reason for the amalgamation; i. Financial statements for the previous three years prior to the date of listing; j. Latest audited financial statements along with notes to accounts and any audit qualifications. Change in accounting policies in the last three years and their effect on profits and reserves (Financial statements should not be later than six months prior to the date of listing); k. Details of its other group companies including their capital structure and financial statements; 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 differenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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