we had the opportunity to provide a brief analysis here
on SEBI’s new circular on the topic.
following post, Yogesh Chande points
to some ambiguities regarding the scope of SEBI’s new circular. Yogesh is a Consultant,
Economic Laws Practice, Advocates & Solicitors. Views expressed by the
author are personal]
the circular issued by Securities and Exchange Board of India (SEBI)
on 4 February 2013 (2013 Circular)
titled “Scheme of Arrangement under the
Companies Act, 1956 – Revised requirements for the Stock Exchanges and Listed
Companies”, rescinding circular dated 3 September 2009 (2009
provides for stringent requirements to be followed like:
SEBI on the draft scheme; and
of the company is passed by postal ballot and e-voting approving the scheme
where: (i) at least three-fourths of the total number of votes and (ii)
two-thirds of the total number of votes cast by public shareholders are
in favour of the resolution.
8.3.5 of the erstwhile SEBI (Disclosure and Investor Protection) Guidelines,
2000] never had within its purview, a petition involving “capital reduction”
under section 100-101 of the Companies Act, 1956 (Act). However,
the 2013 Circular also makes reference to “capital reduction” in clause A (5.1)
on page 2 and also in clause 2(a) of part A of Annexure I on page 6.
rescinds the 2009 Circular, it is not clear whether the intent is also to bring
within its purview the following, which though attracts the provisions of
clause 24(f) of the equity listing agreement,
but does not warrant seeking exemption of SEBI under rule 19(7) of SCRR:
section 101 (capital reduction) not involving allotment of shares; or
amalgamation of an unlisted company with a listed company, which results in
further allotment of shares by the listed company.
Hopefully, we can
expect some clarity on the above from SEBI or stock exchanges.
Update – May 22, 2013: SEBI has since clarified that the circular is applicable to all types of schemes of arrangement and not only those that require an exemption under Rule 19(7).
scheme/petition proposed to be filed before any Court or Tribunal under
sections 391,394 and 101 of the Companies Act, 1956, with the stock exchange,
for approval, at least a month before it is presented to the Court or Tribunal.