In the endeavour to further reinforce transparency and better compliance with the law, SEBI has issued the Master Circular on November 23, 2021; here it is:  

(Ref: SEBI/HO/CFD/DIL1/CIR/P/2021/0000000665): To consolidate and enlist all the requirements that were required to be complied with as mentioned under the circulars issued from time-to-time by the listed entities while preparing a scheme of arrangement/ amalgamation/ merger/ reconstruction/ reduction of capital, etc. (hereinafter referred to as “the Schemes”) and seeking in-principal approval of the SEBI to such Scheme. It covers within its ambit the most recent circulars issued on November 16 (Ref: SEBI/HO/CFD/DIL2/CIR/P/2021/0000000657) and on November 18 (Ref: SEBI/HO/CFD/DIL2/CIR/P/2021/0000000659).

The intention behind introducing these amendments is to ensure that the recognized stock exchanges refer Scheme (s) to SEBI only upon being fully convinced that the listed entity complies with SEBI Act, 1992, rules, regulations, and circulars issued thereunder. The proposed amendments shall apply to all the Scheme (s) filed with the stock exchanges, with an immediate effect. 

While this Master Circular has consolidated all the other circulars about the Schemes, it has made a few amendments concerning the compliances by the listed entities, which are given hereunder: 

Amendment to Part I Para A 2(b)

Para 2(b) of the Circular stands revised as follows: 

Valuation Report as per Para (4) below; accompanied with an undertaking from the listed entity stating that no material event impacting the valuation has occurred during the intervening period of filing the scheme documents with the Stock Exchange and period under consideration for valuation.

• Insertion of Part I Para A 2(j)

Declaration from the listed entity on any past defaults of listed debt obligations of the entities forming part of the Scheme.

• Insertion of Part I Para A 2(k)

No Objection Certificate (NOC) from the lending scheduled commercial banks or financial institutions.

The notification issued on November 18, 2021, is an amendment that adds debenture trustees to the list of people from whom NOC must be sought. Only this requirement shall be applicable on and from November 18, 2021. 

• Insertion of Part I, Para D1.

The fractional entitlements, if any, shall be aggregated and held by the trust, nominated by the Board on that behalf, who shall sell such shares in the market at such price, 

• Within 90 days from the allotment of shares, as per the draft scheme submitted to SEBI.
• The listed Company shall submit a report from its Audit Committee and the Independent Directors to the designated stock exchange, certifying that the listed entity has compensated the eligible shareholders. Listed Company shall submit both the reports within seven days of paying the shareholders.

The Exchange shall ensure compliance with the above and non-compliance, if any shall be submitted to SEBI quarterly. 

• 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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