SEBI Update: Norms for Scheme of Arrangement by unlisted Stock Exchanges, Clearing Corporations and Depositories.

SEBI vide its Circular dated 28^th March 2023 issued for All recognized Stock Exchanges, All recognized Clearing Corporations, All registered Depositories.

The Circular states:

Unlisted Market Infrastructure Institute (MII) desirous of undertaking a scheme of arrangement will have to file the draft scheme of arrangement along with the regulator for obtaining the observation letter or no objection letter before filing such a scheme with any court or tribunal.

At present there is no specific provision for unlisted MII – Stock exchange, clearing corporations and depositories to file the draft scheme of arrangement with SEBI prior to filing the application before any court or tribunal.

Comments were sought by SEBI from unlisted MIIs, and the matter was deliberated by the Secondary Market Advisory Committee (SMAC). Taking into account the recommendations of SMAC, SEBI has decided to introduce the framework for scheme of arrangement by unlisted MIIs.

The unlisted MIIs will have to provide certain information to SEBI while filing the draft scheme arrangement for obtaining the observation letter or no objection letter.

Entities will have to provide information pertaining to valuation report, audit committee report, shareholding pattern of the unlisted MII pre and post the implementation of the scheme of arrangement, and audited financial for the last three year, Auditor’s Certificate, Declaration  from  the  unlisted  MII  on  any  past  defaults  of  debt  obligations (including listed debt, if any) of the entities forming part of the Scheme, No  Objection  Certificate from the lending scheduled  commercial banks or financial institutions or debenture trustees, Report  on  Complaints, Detailed Compliance Report.

The market regulator will have to provide its observation letter or no-objection letter on the draft scheme within 30 days from receiving satisfactory reply with respect to clarification.

The validity of the observation letter or no-objection letter of SEBI will be from 6 months from the date of issuance, within which the scheme will be filed Court or Tribunal for approval.

This circular shall come into effect from April 27^th , 2023.

Link: https://www.sebi.gov.in/legal/circulars/mar-2023/norms-for-scheme-of-arrangement-by-unlisted-stock-exchanges-clearing-corporations-and-depositories_69450.html