The Securities and Exchange Board of India ("SEBI") through its circular dated September 21, 2017, ("New Circular") has aligned the requirements specified for listing under schemes of arrangement under circular dated March 10, 2017 ("Circular"), with those specified under the Securities Contracts (Regulation) Rules, 1957 ("SCRR"). The Circular stated that for any entity to be eligible for the waiver/ relaxation under SCRR, one of the conditions is that, post the scheme, the public shareholders of the transferor company should hold at least twenty five percent (25%) of the paid up share capital of the transferee company. SEBI has now further relaxed the aforesaid condition vide its New Circular by providing flexibility to companies which are unable to comply with the requirement of twenty five percent (25%) shareholding. The flexibility is provided by giving the companies an option to satisfy alternate conditions for listing their securities. Thus, where the companies are not able to comply with the said requirements of twenty five percent (25%) shareholding to be held by public, they can alternatively fulfil the following conditions:
- the entity has a valuation in excess of INR 1600 crore as per the valuation report;
- the value of post‐scheme shareholding of public shareholders of the listed entity in the transferee entity is not less than INR 400 crore;
- at least 10% of the post‐scheme paid‐up share capital of the transferee entity comprises of shares allotted to the public shareholders of the transferor entity; and
- the entity increases the public shareholding to at least 25% within a period of one year from the date of listing of its securities and an undertaking to this effect is incorporated in the scheme.
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