The Securities and Exchange Board of India on 6th July 2021 has notified the Standard Operating Procedure for listed subsidiary company desirous of getting delisted through a Scheme of Arrangement wherein the listed parent holding company and the listed subsidiary are in the same line of business.
SEBI for the purpose of defining “same line of business” has notified the following criteria to be fulfilled by the listed holding company and the listed subsidiary company.
The principal economic activities of both Holding company and Subsidiary Company are under the same Group (3-digit numeric code) under the National Industrial Classification (NIC) Code 2008
At least 50% of revenue from the operations of the listed holding and listed subsidiary company must come from the same line of business and at least 50% of the net tangible assets of the listed holding company and the listed subsidiary must be invested in the same line of business.
Further in case of change of name of the listed entities, within the last one year, at least fifty percent of the revenue, calculated on a restated and consolidated basis, for the preceding one full year has to be earned by it from the activity indicated by its new name.
The listed holding company and the listed subsidiary have to provide self-certification with respect to both the companies being in the same line of business.