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The SEBI through a circular on 17th November 2022, has made it mandatory that any listed entity willing to make a draft scheme of arrangement for listing NCDs or NCRPS to NCLT shall need to comply with the additional requirements mentioned therein. It requires the listed entity to comply with two types of requirements, i.e., pre- and post-requirements. In the pre-requirement, the listed entity who intends to make a draft scheme of arrangement for listing NCDs or NCPRS shall need to comply with certain requirements such as choosing a designated stock exchange, valuation report, certificate of auditor, fairness opinion, Report on the received complaints or comments, unpaid dues or fines or penalties etc. whereas under the post requirements which will be discussed later in this article talks about the post sanction requirements of scheme to be undertaken by the listed entity after the sanction of scheme of arrangement by NCLT. Further, the article will discuss the related obligations of the stock exchange and the process of the draft scheme by SEBI in order to fulfil the post sanction requirements of scheme.
In order to fulfil the post sanction requirements of scheme, the draft scheme of arrangement has to be coupled with the NOC, which is to be provided by the designated stock exchange. Henceforth, the obligations of the stock exchange are:
The processing of the draft scheme of arrangement by SEBI is an important step in the process of post sanction requirements of scheme. The processing generally includes scrutiny of the draft scheme by SEBI through undertaking the following steps:
1. Upon receiving the No objection letter from the stock exchange, the SEBI is required to provide its comments on the draft scheme of arrangement.
2. While processing the draft scheme of the arrangement, the SEBI may seek clarifications from any person, including the stock exchange or the listed entity and may also seek expert opinion from a lawyer, practising chartered accountant, practising company secretary etc.
3. The SEBI shall provide its comments to the stock exchange on the Draft scheme of arrangement within 30 days from the date of:
4. In case of any complaint or comments are received by the SEBI on the draft scheme of the arrangement, in that case, such complaint or comment shall be forwarded to the designated stock exchange for undertaking necessary resolution by the listed entity.
The process of post sanction requirements of the scheme initiates after the fulfilment of obligations by the Stock exchange and the processing of the draft scheme by SEBI. The post sanction requirements of scheme by the listed entities are:
The SEBI[1] has mandated the listed entities to comply with the post sanction requirements of schemes even after complying with the pre-sanction of the scheme of arrangement. The SEBI, through keeping a check in the listing of con convertible debenture and non-convertible redeemable preference shares during a scheme of the arrangement, has mandated that the listed entity shall obtain the NOC from the stock exchange and further scrutinised the draft scheme by SEBI before making any application for sanction of the scheme to NCLT. Henceforth, in order to make the entity abide by all the provisions in the scheme, it is made mandatory that the listed entity shall start trading within 60 days of receiving the order of NCLT.
Read Our Article: SEBI Scheme of Arrangement for Listed NCDs & NCRPS
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