On November 30, 2015, SEBI issued a circular granting certain relaxations from strict enforcement of listing related obligations under the Securities Contracts (Regulation) Rules, 1957 ("SCR Rules") and under the Listing Regulations ("SEBI Circular"). The SCR Rules empower SEBI to waive/ relax the strict enforcement of any or all of the requirements with respect to listing under the SCR Rules. A listed issuer of securities, desirous of submitting a draft/ scheme of arrangement under the SCR Rules and under Section 391-394 of the Companies Act, 1956 or under Section 230-234 of the Companies Act, 2013, as applicable ("Companies Act"), may be exempted from the strict compliance of certain listing related obligations under the SCR Rules, provided the conditions enumerated under the SEBI Circular are adhered to. Some of the conditions are summarised below:

  1. The equity shares sought to be listed are proposed to be allotted by the unlisted issuer/ transferee entity, to the holders of securities of a listed entity/ transferor entity pursuant to a scheme of reconstruction or amalgamation ("Scheme") sanctioned by a High Court under the Companies Act.
  2. A minimum of 25% (twenty-five percent) of the post-Scheme paid up share capital, in the unlisted issuer, must comprise of shares allotted to public shareholders in the transferor entity. The shares of the transferee entity issued in lieu of the locked-in shares of the transferor entity will be subject to lock-in for the remaining period;
  3. Companies listed solely on regional stock exchanges, seeking exemptions from listing related obligations, will be required to obtain an in-principle approval for listing on stock exchange(s) having nationwide trading terminals;
  4. Listed entities are also required to submit certain documents, inter alia, the draft scheme of arrangement/ amalgamation, valuation reports, report from an audit committee recommending the draft Scheme, fairness opinion by a merchant banker on the valuation of shares/ assets, pre and post shareholding pattern of the unlisted entity pursuant to the Scheme and an auditor's certificate, the format for which has been prescribed in the SEBI Circular;
  5. The listed entity seeking exemption will be required to submit a "Complaints Report" to the stock exchange(s), that will contain the details of complaints/ comments received by it, on the draft Scheme from various sources, the format for which has been prescribed in the SEBI Circular;
  6. Further, such a listed entity is to include, inter alia, the "Observation Letter" obtained from the stock exchange(s), pre and post – arrangement/ amalgamation capital structure and shareholding pattern and the "Complaint Report" in the explanatory statement/ notice/ proposal accompanying the shareholders' resolution to be passed, for the approval of the Scheme, which may also be obtained through postal ballot or e-voting.
  7. Once the Scheme has been sanctioned by the concerned High Court, the unlisted entity will be required to make an application to SEBI in the format provided for in the SEBI Circular in order to avail the exemptions;
  8. Listed entities desirous of listing equity shares with differential rights as to, inter alia, dividend and voting rights and warrants offered along with non-convertible debentures may also apply to SEBI for exemptions from obligations related to listing under the SCR Rules.

The SEBI Circular has been issued to fully encapsulate the compliances/ requirements under erstwhile SEBI circulars, which were rescinded with the coming into effect of the Listing Regulations.

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