The Securities and Exchange Board of India vide its notification dated 3rd November 2020, has decided to further streamline the processing of draft schemes filed with the stock exchanges, and make certain amendments to its earlier Circular dated March 10, 2017, on Scheme of Arrangement on Listed Entities.
The circular shall be applicable for all the schemes filed with the stock exchanges after 17th November 2020.
As per the amendment, all listed entities are required to submit a valuation report from a Registered Valuer.
The Valuation Report is required to be placed before the Audit Committee of the listed entity.
The Audit Committee report shall also comment on the following:
•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
Stock Exchanges shall provide the ‘No-Objection’ letter to SEBI on the draft scheme; in coordination with each other.
SEBI shall issue a Comment letter upon receipt of ‘‘No-Objection’ letter from Stock Exchanges having nationwide trading terminals. In other cases, SEBI shall issue Comment letter upon receipt of ‘‘No-Objection’ letter from the Designated Stock Exchange.
