SEBI issues operational guidelines to comply w.r.t scheme of arrangement by entities who have listed their NCDs/NCRPS

CIRCULAR NO. SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2022/156, Dated 17-11-2022

Earlier, the SEBI had introduced a new regulation 59A which prescribes that the listed entity that has listed Non-Convertible Debentures (NCDs) or Non-Convertible Redeemable Preference Shares (NCRPS) and intends to undertake/involved in a scheme of arrangement shall file the draft scheme with Stock Exchange(s) for obtaining No-Objection Letter, before filing such scheme with any court or Tribunal. Now the SEBI has prescribed operational guidelines in this regard.

Part I of the operational guidelines prescribes the requirements to be complied by the “listed entities” which intend to undertake a scheme of arrangement or are involved in a scheme of arrangement.

In case of entities that are debt listed and have raised money by way of a public issue or private placement of NCDs/NCRPS, shall comply with prescribed requirements before the scheme of arrangement is filed with the National Company Law Tribunal (NCLT).

PART II of the guidelines, prescribes the requirements by listed entity/resultant entity post sanction of scheme of arrangement by NCLT.

The listed entity/ resultant entity shall ensure that steps for listing of NCDs/NCRPS issued pursuant to the scheme of arrangement, are completed and trading commences within sixty days of receipt of the order of the NCLT, simultaneously on all the Stock Exchange(s)where the NCDs/ NCRPS are listed.

Before the commencement of trading, the listed entity/resultant entity, in addition to disclosing the information in the form of an information document on the websites of the Stock Exchange(s)where NCDs/NCRPS are listed, shall also give an advertisement in an English national daily and a regional daily having wide circulation at the place where the registered office of the transferee entity is situated, giving the details such as Name, address, capital structure, details of change in object clause, business model etc.

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 provisions of applicable laws and regulations.

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