Schemes of Arrangement by Listed Entities and (ii) Relaxation under Sub-rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957

Last updated: 07 November 2020

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This SEBI circular introduces amendments to the framework for Schemes of Arrangement by listed entities and the relaxation under Rule 19(7) of the Securities Contracts (Regulation) Rules, 1957. The changes aim to streamline processing and empower stock exchanges. Key updates include enhanced reporting requirements for Audit Committees and Independent Directors, the mandatory submission of valuation reports from Registered Valuers, and revised definitions for 'substantially the whole of the undertaking' and 'public'. The circular also details new disclosure requirements for listed entities, including financial statements, shareholding patterns, and risk factors, to be published before trading commences post-scheme.

CIRCULAR SEBI/HO/CFD/DIL1/CIR/P/2020/215 November 3, 2020 To All Listed Entities who have listed their equity and convertibles All the Nationwide Stock Exchanges Dear Sir/Madam, Sub: Schemes of Arrangement by Listed Entities and (ii) Relaxation under Sub-rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 1.SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017has laid down the framework for Schemes of Arrangement by listed entities and relaxatio

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FAQ :

The circular aims to streamline the processing of draft schemes filed with stock exchanges and empower them to ensure listed entities comply with SEBI regulations before referring schemes to SEBI.

This circular is applicable for all schemes filed with stock exchanges after November 17, 2020. However, an amendment regarding listing and trading approval applies to listed entities after November 3, 2020.

The Audit Committee must now consider the Valuation Report and comment on the necessity, rationale, synergies, shareholder impact, and cost-benefit analysis of the scheme. Additionally, a report from the Committee of Independent Directors is required, confirming the scheme is not detrimental to shareholders.

All listed entities are required to submit a valuation report from a Registered Valuer, who must meet specific qualifications and experience criteria as per the Companies Act, 2013.

Listed entities must now provide extensive details, including financial statements for the last three years, shareholding patterns, promoter and director details, business overview, risk factors, outstanding litigations, and any regulatory or criminal proceedings against promoters.