Sep 29, 2022

Stock Exchanges issue revised SOPs in respect of draft Scheme of Arrangement filed under Regulation 37 of SEBI (LODR) Regulation, 2015

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BSE Ltd. (‘BSE’) and National Stock Exchange of India Ltd. (‘NSE’) have issued revised Standard Operating Procedures (‘SOPs’) to be followed by listed entities in respect of filing of draft Scheme of Arrangement (‘Scheme’) with the stock exchanges under Regulation 37 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The revised SOPs have been issued by BSE and NSE on September 28, 2022.

The revised SOPs are similar to the SOPs issued earlier by BSE on November 01, 2021 and NSE on November 02, 2021, and, the changes in the revised SOPs majorly pertain to the timeline provided to a Company for responding to the queries raised by the Stock Exchanges.

Earlier a period of 5 working days was allowed to an Applicant Listed Company for responding to the Exchange queries raised on the Scheme submitted under Regulation 37 of SEBI (LODR) Regulation, 2015 and for any rectification thereof. The revised SOPs have relaxed the said timeline, and, now a period of 7 working days have been provided to a Company for submitting appropriate response/rectification/clarification to the Exchange queries. Further, on expiry of aforesaid timelines, if a company is unable to make submissions, then any fees paid by a Company for processing of the application shall be forfeited by the Exchange/Regulator and the scheme documents shall be returned to the company.

A bird’s eye view of the revised SOPs is given below:

  1. Scheme shall be submitted to Exchange with all documents as per the Exchange Checklist within 15 working days of board meeting approving draft Scheme. If Scheme not submitted within 15 working days, company shall take fresh approval from its board considering fresh financials, valuation report etc.
  2. Audited financial statements of last 3 years (not older than 6 months) of unlisted companies involved in the Scheme shall be submitted, and, the said financials shall be considered for preparation of Valuation Report by the valuer under Income Approach.
  3. At the time of providing the observation letter, the Exchange shall seek an undertaking from the listed entity stating that the financials of the unlisted company(ies) shall not be more than 6 months old at the time of submissions of Scheme paper to NCLT.
  4. For valuation other than Income Approach, the period under consideration shall not be older than 3 months and the board shall consider the Scheme within 7 working days of the issuance of the valuation report.
  5. Documents referred in Para (I)(A)(2) of SEBI Master Circular dated November 23, 2021 and the checklist of respective stock exchange(s) shall be complete in all respects.
  6. Any queries/clarification/documents etc. required by the Exchange shall be rectified within a period of 7 working days. In case company is unable to make submissions within the said timeline, then any fees paid by the Company for processing of application shall be forfeited by the Exchange/Regulator and the Scheme documents would be returned to the Company.
  7. Non receipt of appropriate responses by the Exchange within the timelines may require the Company to re-file the Scheme with requisite rectifications along with fresh set of valuation report, fairness opinion, recommendation of audit committee etc. and fresh fees shall be paid to the Exchange/Regulator.

CLICK HERE to read the revised SOPs issued by BSE Ltd.

CLICK HERE to read the revised SOPs issued by National Stock Exchange of India Ltd.

Links to other SOPs/circulars:

  1. Master Circular No. SEBI/HO/CFD/DIL1/CIR/P/2021/0000000665 dated November 23, 2021.
  2. SOPs of BSE Ltd. issued on November 01, 2021.
  3. SOPs of National Stock Exchange of India Ltd. issued on November 02, 2021.
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