On November 30, 2015, SEBI issued a circular granting certain
relaxations from strict enforcement of listing related obligations
under the Securities Contracts (Regulation) Rules, 1957
("SCR Rules") and under the Listing
Regulations ("SEBI Circular"). The SCR
Rules empower SEBI to waive/ relax the strict enforcement of any or
all of the requirements with respect to listing under the SCR
Rules. A listed issuer of securities, desirous of submitting a
draft/ scheme of arrangement under the SCR Rules and under Section
391-394 of the Companies Act, 1956 or under Section 230-234 of the
Companies Act, 2013, as applicable ("Companies
Act"), may be exempted from the strict compliance of
certain listing related obligations under the SCR Rules, provided
the conditions enumerated under the SEBI Circular are adhered to.
Some of the conditions are summarised below:
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 the Companies Act.
A minimum of 25% (twenty-five
percent) of the post-Scheme paid up share capital, in the
unlisted issuer, must comprise of shares allotted to public
shareholders in the transferor entity. The shares of the transferee
entity issued in lieu of the locked-in shares of the transferor
entity will be subject to lock-in for the remaining period;
Companies listed solely on regional
stock exchanges, seeking exemptions from listing related
obligations, will be required to obtain an in-principle approval
for listing on stock exchange(s) having nationwide trading
Listed entities are also required to
submit certain documents, inter alia, the draft scheme of
arrangement/ amalgamation, valuation reports, report from an audit
committee recommending the draft Scheme, fairness opinion by a
merchant banker on the valuation of shares/ assets, pre and post
shareholding pattern of the unlisted entity pursuant to the Scheme
and an auditor's certificate, the format for which has been
prescribed in the SEBI Circular;
The listed entity seeking exemption
will be required to submit a "Complaints Report" to the
stock exchange(s), that will contain the details of complaints/
comments received by it, on the draft Scheme from various sources,
the format for which has been prescribed in the SEBI Circular;
Further, such a listed entity is to
include, inter alia, the "Observation Letter"
obtained from the stock exchange(s), pre and post –
arrangement/ amalgamation capital structure and shareholding
pattern and the "Complaint Report" in the explanatory
statement/ notice/ proposal accompanying the shareholders'
resolution to be passed, for the approval of the Scheme, which may
also be obtained through postal ballot or e-voting.
Once the Scheme has been sanctioned
by the concerned High Court, the unlisted entity will be required
to make an application to SEBI in the format provided for in the
SEBI Circular in order to avail the exemptions;
Listed entities desirous of listing
equity shares with differential rights as to, inter alia, dividend
and voting rights and warrants offered along with non-convertible
debentures may also apply to SEBI for exemptions from obligations
related to listing under the SCR Rules.
The SEBI Circular has been issued to fully encapsulate the
compliances/ requirements under erstwhile SEBI circulars, which
were rescinded with the coming into effect of the Listing
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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