The Securities and Exchange Board of India (‘SEBI’) vide its notification no. SEBI/LAD/NRO/GN/2016-17/029 and SEBI/LAD/NRO/GN/2016-17/030 dated 15 February 2017 has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’) and SEBI ((Issue of Capital and Disclosure Requirements) Regulations, 2009 (‘ICDR Regulations’) respectively.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’):
Regulation 37 of the LODR Regulations required every listed company desirous of undertaking a scheme of arrangement or involved in a scheme of arrangement to file the draft scheme of arrangement, proposed to be filed before NCLT under Sections 230 to Section 234 and Section 66 of Companies Act, 2013, whichever applicable, with the stock exchange(s) for obtaining Observation Letter or No-Objection Letter.
The amended notification has relaxed the aforesaid norms by inserting Sub Regulation (6) under Regulation 37 for merger of a wholly-owned subsidiary with its holding company. As per the inserted sub-regulation, the draft scheme of arrangement for proposed merger of wholly-owned subsidiary with its holding company is not required to be filed with Stock Exchanges for obtaining the Observation letter or No-Objection Letter. However, such draft schemes shall be filed with Stock Exchanges for the purpose of disclosure.
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (‘ICDR Regulations’):
The ICDR Regulations have been amended pursuant to SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2017. The following are the key highlights the said amendments:
• In Regulation 70 (1) and 70 (3) pertaining to preferential issue, reference of Companies Act, 2013 and Insolvency and Bankruptcy Code, 2016 and Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, wherever applicable have been inserted;
• The following Regulations have been inserted after Regulation 111:
- Regulation 111A in relation to liability for contravention of the Act, rules or the regulations. This provision provides that the listed entity or any other person who contravenes any of the provisions of these regulations, shall, in addition to the liability for action in terms of the securities laws, be liable for the following actions by the respective stock exchange(s), in the manner specified in the circulars or guidelines issued by the Board
Imposition of fines;
Suspension of trading;
Freezing of promoter/promoter group holding of designated securities, as may be applicable, in coordination with depositories;
Any other action as may be specified by the Board from time to time
- Regulation 111B provides that if the listed entity fails to pay any fine imposed upon it by the recognised stock exchange(s), within the period as specified from time to time, the stock exchange may initiate such other action in accordance with law, after giving a notice in writing
To read the full text of the notifications, please click on the below links:
Amendments in LODR Regulations - http://www.sebi.gov.in/cms/sebi_data/attachdocs/1487310784475.pdf;
Amendments in ICDR Regulations - http://www.sebi.gov.in/cms/sebi_data/attachdocs/1487310888220.pdf