TaxTMI 
TaxTMI 
TaxTMI 
Master Circular on (i) Scheme of Arrangement by Listed Entities and (ii) Relaxation under Sub- rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957
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....on taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular; 4.2. any application made to SEBI under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of this Master Circular; 4.3. the previous operation of the rescinded circulars or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the rescinded circulars, any penalty, incurred in respect of any violation committed against the rescinded circulars, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as if the rescinded circulars have never been rescinded; 5. Recognized Stock Exchanges, Issuers and other stakeholders are directed to: 5.1. comply with the conditions laid down in this circular; 5.2. bring the provisions of this circular to the notice of listed entities/ issuers of listed Non-Convertible Securiti....
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....t of any or all of the requirements with respect to listing prescribed by these rules. 4. 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. [SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017] However, such draft schemes shall be filed with the Stock Exchanges for the purpose of disclosures and the Stock Exchanges shall disseminate the scheme documents on their websites. 5. 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, as amended from time to time (hereinafter referred to as "the ICDR Regulations"). 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. [SEBI Circular No. CFD/DIL3/CIR/2017/26 dated March 23, 2017.] 6. The listed entity shall pay a fee to SEBI at the rate of 0.1% of the paid-up share capital of the listed/ tran....
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....erger/demerger/amalgamation/arrangement * Rationale of the scheme * Synergies of business of the entities involved in the scheme * Impact of the scheme on the shareholders * Cost benefit analysis of the scheme; d) Fairness opinion by a SEBI Registered merchant banker on valuation of assets/shares done by the valuer for the listed entity and unlisted entity; e) Pre and post amalgamation shareholding pattern of unlisted entity; f) Audited financials of last 3 years (financials not being more than 6 months old) of unlisted entity; g) Auditor's Certificate as per Para (5) below; h) Detailed Compliance Report as per the format specified in Annexure I duly certified by the Company Secretary, Chief Financial Officer and the Managing Director, confirming compliance with various regulatory requirements specified for schemes of arrangement and all accounting standards. i) Report from the Committee of Independent Directors recommending the draft Scheme, taking into consideration, inter alia, that the scheme is not detrimental to the shareholders of the listed entity. j) Declaration from the listed entity on any past defaults of listed debt obligations of the entities for....
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..... [SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2020/215 dated November 3, 2020 ] The valuation report shall contain the workings, relative fair value per share and fair share exchange ratio in the manner as provided in Annexure-II. For the purpose of this clause, the Registered Valuer shall be a person, registered as a valuer, having such qualifications and experience and being a member of an organization recognized, as specified in Section 247 of the Companies Act, 2013 read with the applicable Rules issued there under. b) However, Valuation Report is not required in cases where there is no change in the shareholding pattern of the listed entity / resultant company. c) For the limited purpose of this Circular, 'change in the shareholding pattern' shall mean; i. change in the proportion of shareholding of any of the existing shareholders of the listed entity in the resultant company; or ii. new shareholder being allotted equity shares of the resultant company; or iii. existing shareholder exiting the company pursuant to the Scheme of Arrangement d) Further, a few examples illustrating 'no change in shareholding pattern' are indicated below: i. In case a....
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.... the Stock Exchanges within 7 days of expiry of 21 days from the date of filing of Draft Scheme with Stock Exchanges and hosting the Draft Scheme along with documents specified under para (2) above on the websites of Stock Exchanges and the listed entity. 7. Unpaid Dues Report [SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2019/192 dated September 12, 2019 ] a) All listed entities shall ensure that all dues to, and/or fines/penalties imposed by SEBI, Stock Exchanges and the Depositories have been paid/settled before filing the draft scheme with the designated stock exchange. b) In case of unpaid dues / fines / penalties, the listed entity shall submit to stock exchanges a 'Report on the Unpaid Dues' which shall contain the details of such unpaid dues in the format given in Annexure V to this Circular, prior to obtaining Observation Letter from stock exchanges on the draft scheme. c) The report on unpaid dues as mentioned above, shall be submitted by listed entity to the stock exchanges along with the draft scheme. d) 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 provisi....
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....r / Promoter Group, Related Parties of Promoter / Promoter Group, Associates of Promoter / Promoter Group, Subsidiary/(s) of Promoter / Promoter Group. 12 SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2020/215 dated November 3, 2020 iii. Where the parent listed entity has acquired, either directly or indirectly, the equity shares of the subsidiary from any of the shareholders of the subsidiary who may be Promoter / Promoter Group, Related Parties of Promoter / Promoter Group, Associates of Promoter / Promoter Group, Subsidiary/(s) of Promoter / Promoter Group of the parent listed entity, and if that subsidiary is being merged with the parent listed entity under the Scheme. iv. Where the scheme involving merger of an unlisted entity results in reduction in the voting share of pre-scheme public shareholders of listed entity in the transferee / resulting company by more than 5% of the total capital of the merged entity; v. where the scheme involves transfer of whole or substantially the whole of the undertaking of the listed entity and the consideration for such transfer is not in the form of listed equity shares; For the purpose of this clause, the expression "substantially the w....
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.... are issued to the holders of specified securities of such listed entity. Such scenarios may broadly include the following: * A listed entity, which has listed its specified securities, (demerged entity) demerges a unit and transfers the same to another entity (resultant entity), and the resultant entity issues NCDs and/or NCRPS to the holders of the specified securities of listed entity (i.e. demerged entity) as a consideration under the scheme of arrangement. * A listed entity, which has listed its specified securities, (amalgamating entity) is merged with another entity (amalgamated entity), and the amalgamated entity issues NCDs and/or NCRPS to the holders of the specified securities of listed entity (i.e. amalgamating entity) as a consideration under the scheme of arrangement. ii. It is clarified that only the NCDs and/or NCRPS issued to the holders of listed specified securities, vide the scheme of arrangement, would be eligible for seeking listing. iii. However, if the same series/class of NCDs and/or NCRPS are also allotted to other investors, other than the allotment done to the holders of listed specified securities as per the scheme of arrangement, then such NCDs....
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....disclose on their websites the documents listed at part (I) (A) (2) above immediately on receipt. It shall also disclose the Observation Letter on its website immediately upon issuance. 4. Stock Exchanges shall provide the 'No-Objection' letter to SEBI on the draft scheme; in co-ordination with each other. SEBI shall issue Comment letter upon receipt of ''No- Objection' letter from Stock Exchanges having nationwide trading terminals. In other cases, SEBI shall issue Comment letter upon receipt of ''No-Objection' letter from the Designated Stock Exchange. [SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2020/215 dated November 3, 2020 ] 5. The 'Unpaid Dues Report' shall be forwarded by the Stock Exchanges to SEBI before SEBI communicates its comments on the Draft Scheme to the Stock Exchanges. Such report shall be submitted as per the format specified at Annexure V. [SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2019/192 dated September 12, 2019 ] C. Processing of the Draft Scheme by SEBI [SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017 and SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2020/215 dated November 3, 2020 ] 1. Upon receipt of 'No-Objection' letter from the Stock Excha....
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....D/DIL3/CIR/2017/21 dated March 10, 2017 ]. A. Requirements to be fulfilled by Listed Entity for Listing of Equity Shares 1. Eligibility conditions for companies seeking relaxation under sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 A listed issuer may submit the Draft Scheme of arrangement 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 NCLT under Section 230-234 of the Companies Act, 2013; 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; Provided that an entity which does....
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....of a listed entity (transferor entity); d) The names of the allottees have been entered as beneficial owners in the records of the depositories pursuant to the Scheme or share certificates have been dispatched to the allottees. 3. Additional conditions to be complied after the Scheme is sanctioned by the Hon'ble High Court or NCLT and at the time of making application for relaxation under Sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, if listing of Non-Convertible Redeemable Preference Shares (NCRPS) / Non-Convertible Debentures (NCDs) is envisaged through a Scheme of Arrangement [SEBI Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/0000000103 dated July 29, 2022 (updated as on December 01, 2022) ] The application for relaxation under Sub-rule (7) of rule 19 of SCRR for listing of NCDs and/or NCRPS shall include a detailed Compliance Report as per the format specified in Annexure VI, duly certified by the Company Secretary and the Managing Director, confirming compliance of the Scheme of Arrangement with the various regulatory requirements specified in this regard. 4. In case of a scheme involving merger of a listed company or its division into....
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....rovide details of the authorized, issued, subscribed and paid up capital (Number of instruments, description, and aggregate nominal value); e) Shareholding pattern giving details of its promoter group shareholding, group companies - pre and post scheme of amalgamation; f) Names of its ten largest shareholders - number and percentage of shares held by each of them, their interest, if any; g) Name and details of Promoters - educational qualifications, experience, address; h) Name and details of Board of Directors (experience including current / past position held in other firms); i) Business Model / Business Overview and Strategy; j) Reason for the amalgamation; k) Restated Audited Financials for the previous three financial years prior to the date of listing; l) Latest restated audited financials along with notes to accounts and any audit qualifications. (Financial statements should not be later than six months prior to the date of listing); m) Change in accounting policies in the last three years and their effect on profits and reserves; n) Summary table of contingent liabilities as disclosed in the restated financial statements; o) Summary table of related pa....
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.... 30 days of receipt of complete information, including the no-objection certificate from the Stock Exchange. Annexure I Format of the Compliance Report to be submitted along with the draft scheme It is hereby certified that the draft scheme of arrangement involving (Name of the entities) does not, in any way violate, override or limit the provisions of securities laws or requirements of the Stock Exchange(s) and the same is in compliance with the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and this circular, including the following: Sl. Reference Particulars 1 Regulations 17 to 27 of LODR Regulations Corporate governance requirements 2 Regulation 11 of LODR Regulations Compliance with securities laws Requirements of this circular (a) Para (I)(A)(2) Submission of documents to Stock Exchanges (b) Para (I)(A)(2) Conditions for schemes of arrangement involving unlisted entities (c) Para (I)(A)(4) (a) Submission of Valuation Report (d) Para (I)(A)(5) Auditors certificate regarding compliance with Accounting Standards (e) Para (I)(A)(9) Provision of approval of public shareholders through e-voting Compa....
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....ing said or done in the course of, or in connection with the services that are subject to this Certificate, will extend any duty of care that we may have in our capacity of the statutory auditors of any financial statements of the Company. We carried out our examination in accordance with the Guidance Note on Audit Reports and Certificates for Special Purposes, issued by the Institute of Chartered Accountants of India. Based on our examination and according to the information and explanations given to us, we confirm that the accounting treatment contained in the aforesaid scheme is in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and circulars issued thereunder and all the applicable Accounting Standards notified by the Central Government under the Companies Act, 1956/ Companies Act, 2013 and/or the accounting treatment in respect of ………………………. (specify the financial statement item(s)) as prescribed by………………………………. (name of the regulator) vide its Notification …………&h....
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.... is in compliance with the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017, and SEBI Circular No. CIR/IMD/DF/50/2017 dated May 26, 2017, as amended from time to time, including the following: Sr. No. Reference Particulars Whether complied (YES/N) Remarks (How complied) 1 Para 12(A)(i) Eligibility for seeking listing of NCRPS/NCDs 2 Para 12(A)(ii) Tenure/Maturity 3 Para 12(A)(iii) Credit Rating 4 Para 12(A)(iv) Valuation Report 5 Para 12(A)(v) Disclosures in the Scheme of Arrangement 6 Para 12(A)(vi) Other Conditions Company Secretary Managing Director Schedule I List of Circulars/Notifications S. No. Circular / Master Circular Notification No. and Date Subject 1 CFD/DIL3/CIR/2017/21 dated March 10, 2017 Schemes of Arrangement by Listed Entities and (ii) Relaxation under Sub-rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 2 CFD/DIL3/CIR/2017/26 dated March 23, 2017 Schemes of Arrangement by Listed Entities and (ii) Relaxation under Sub-rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 3 C....