SEBI introduces a framework for the scheme of arrangement by unlisted Market Infrastructure Institutions

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  • Last Updated on 31 March, 2023

unlisted Market Infrastructure Institutions

Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/45, dated 28.03.2023

SEBI has introduced a framework for unlisted Market Infrastructure Institutions (MIIs) such as Stock Exchanges, Clearing Corporations and Depositories to file a draft scheme of arrangement with SEBI before filing such a scheme with the Court or Tribunal.

MIIs desirous of undertaking a scheme must file a draft scheme along with a non-refundable fee with SEBI for obtaining the observation or no-objection letter. Until now, there was no specific provision for unlisted MIIs o file the draft scheme of arrangement with SEBI, prior to filing the application before any Court or Tribunal.

Some of the key information that must be submitted while filing the draft scheme of arrangement for obtaining the observation letter or no-objection letter include:

(a) The draft scheme of arrangement or amalgamation or merger etc.

(b) Approval of the governing board of the unlisted MII.

(c) A valuation report provided by an independent registered valuer.

(d) A report from the Audit Committee recommending the draft Scheme.

(e) Shareholding pattern of the unlisted MII pre and post Scheme.

(f) Audited financials of the last 3 years of unlisted entities.

Further, unlisted MIIs must ensure that all dues to, and fines or penalties imposed by SEBI or any other agency have been paid or settled before filing the draft Scheme.

Also, the validity of the observation letter or no-objection letter of SEBI shall be for six months from the date of issuance, within which the Scheme shall be filed with any Court or Tribunal, as required, for approval. The provisions of this circular shall come into effect from the 30th day from the date of issuance of the circular (i.e. April 27, 2023).

Click Here To Read The Full Circular

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