The SEBI

In March 2017, SEBI prescribed the framework for Schemes of Arrangement by Listed Entities and Relaxation under Rule 19 (7) of the Securities Contracts (Regulation) Rules, 1957. SEBI has now made certain amendments to the aforesaid framework, highlights of which are below: (see circular dated 3rd January 2018). The provisions will not be applicable to schemes which solely provide for merger of a wholly owned subsidiary or its division with the parent company. However, such draft schemes would need to be filed with the stock exchanges for the purpose of disclosures. In respect of the schemes of arrangement, the valuation report and the fairness opinion would need to be provided by an Independent Chartered Accountant or an Independent SEBI Registered Merchant Banker respectively. In case of any material conflict of interest among themselves or with the company, including that of common directorships or partnerships, the chartered accountant and the merchant banker would not be treated as independent. The shareholding percentage of pre-scheme public shareholders of the listed entity and the Qualified Institutional Buyers (QIBs) of the unlisted entity, shall not be less than 25% of the share capital of the merged entity on a fully diluted basis.