Market regulator Securities and Exchange Board of India (SEBI) has issued a master circular for listed companies, which includes the detailed requirements to be complied by such entities while undertaking schemes of arrangements. The watchdog has compiled seven different circulars on the topic in the master circular.
Scheme of arrangements is a compromise or arrangement between the company and its creditors or between the company and its members. It includes the reorganisation of company's share capital by consolidation of shares of different classes or by division of shares into shares of different classes, or by both these methods.
Companies utilise schemes of arrangements as a form of financial and corporate restructuring, including sale of assets or the business itself or amalgamation with another company. Such a scheme holds a position of sanctity after receiving court's sanction.
"Securities and Exchange Board of India (SEBI), from time to time, has been issuing various circulars/ directions which lay down the detailed requirements to be complied by listed entities while undertaking schemes of arrangements. In order to enable the users to have access to the applicable circulars at one place, Master Circular in respect of schemes of arrangement has been prepared," the market watchdog said in the introduction to the master circular.
"This Master Circular is a compilation of relevant and updated circulars issued by SEBI which deal with schemes of arrangement and which are operational as on date of this circular," SEBI further added.
The regulator noted that in case of any inconsistency between the Master Circular and the applicable circulars, the content of the relevant circular shall take precedence.
The circulars compiled into the master circular pertain to the subjects of Schemes of Arrangement; Relevant date for computing pricing; Listing of Non-Convertible Redeemable Preference Shares (NCRPS) / Non Convertible Debentures (NCDs) through a Scheme of Arrangement; Amendment to public shareholding requirement; Various further amendments; Unpaid Dues Report; and Empowering the stock exchanges, SEBI informed.