SEBI Provides Clarity On ‘Scheme Of Arrangement’ Norms
Listed entities will have one year post scheme of arrangement to comply with minimum shareholding norms.
A listed entity will have one year’s time post a ‘scheme of arrangement’ to comply with the minimum shareholding requirements subject to certain conditions, according to SEBI.
Scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors. As per norms, at least 25 percent of the post-scheme paid-up share capital of the transferee entity should have been allotted to the public shareholders in the transferor entity.
Providing clarity on the applicability of norms with regard to such schemes, the regulator said that subject to certain conditions, those entities would have more time to comply with the minimum public shareholding stipulation.
Such an entity should “increase the public shareholding to at least 25 percent within a period of one year from the date of listing of its securities and an undertaking to this effect is incorporated in the scheme”, SEBI said in a circular.
This would be subject to certain conditions including that the entity concerned has a valuation in excess of Rs 1,600 crore as per the valuation report. Besides, the value of post-scheme shareholding of public shareholders of the listed entity in the transferee entity should not be less than Rs 400 crore.
“At least 10 percent of the post-scheme paid-up share capital of the transferee entity comprises of shares allotted to the public shareholders of the transferor entity,” the circular said.
In March this year, SEBI streamlined regulatory framework for ‘scheme of arrangement’ by listed firms to check any possible ‘bypassing’ of norms and prevent companies from seeking direct approval of NCLT for such deals.