Master Circular on Scheme of Arrangement

SEBI on June 21, 2023 has issued a Master Circular on Scheme of Arrangement. The Listed entity shall submit the following documents to the Stock Exchanges for approval of scheme of arrangement-

1. Draft scheme of arrangement.
2. Valuation report.
3. Audit committee report: including Need for the merger/demerger/amalgamation/arrangement, Rationale of the scheme, Synergies of business of the entities involved in the scheme Impact of the scheme on the shareholders, Cost benefit analysis of the scheme.
4. Fairness opinion by a SEBI Registered merchant banker on valuation of assets/shares done by the valuer for the listed entity and unlisted entity;
5. Pre and post amalgamation shareholding pattern of unlisted entity;
6. Audited financials of last 3 years(financials not being more than 6 months old)of unlisted entity;
7. Auditor’s Certificate;
8. Detailed Compliance Report certified by the Company Secretary, Chief Financial Officer and the Managing Director, confirming compliance with various regulatory requirements specified for schemes of arrangement and all accounting standards.
9. Report from the Committee of Independent Directors recommending the draft Scheme, taking into consideration , inter alia, that the scheme is not detrimental to the shareholders of the listed entity.
10. Declaration from the listed entity on any past defaults of listed debt obligations of the entities forming part of the scheme.
11. No Objection Certificate (NOC) from the lending scheduled commercial banks/financial institutions/debenture trustees, from not less than 75% of the secured creditors in value.
12. Report on Complaints.

All listed entities shall ensure that all dues to, and/or fines/penalties imposed by SEBI, Stock Exchanges and the Depositories have been paid/settled before filing the draft scheme with the designated stock exchange.

Immediately upon filing of the Draft Scheme of arrangement with the Stock Exchanges, the listed entity shall disclose the Draft Scheme of arrangement and all the documents. Listed entity shall also disclose the Observation Letter of the Stock Exchanges on its website within 24 hours of receiving the same.

The Listed entities shall ensure that the Scheme of Arrangement submitted with the NCLT for sanction, provides for voting by public shareholders through e-voting, after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution.