SEBI Clarifies On 'Schemes Of Arrangement' For Entities With Listed Debt Securities

Capital markets regulator Sebi on Friday clarified the framework pertaining to 'schemes of arrangement' for entities that have only listed their debt securities.
     
A scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors.
     
Sebi, in November, had put in place operational guidelines pertaining to a "scheme of arrangement" by entities who have listed their debt securities—non-convertible debentures (NCDs) or non-convertible redeemable preference shares (NCRPS).
     
Under this, the entity that has listed NCDs or NCRPS and which intends to undertake a scheme of arrangement or is involved in a scheme of arrangement would file the draft scheme with stock exchanges for obtaining a no-objection letter, before filing such scheme with any court or tribunal.
     
Further, the exchange would have to forward such draft schemes to the Securities and Exchange Board of India (Sebi).
     
In a fresh circular, Sebi clarified that the operational guidelines issued in November would not apply to a scheme of arrangement which solely provides for an arrangement between a debt-listed entity and its unlisted wholly-owned subsidiary.
     
However, such debt listed entity would file the draft scheme of arrangement with stock exchanges for the purpose of the disclosure. Besides, stock exchanges would disseminate the scheme documents on their websites.
     
Earlier, the regulator had amended rules with respect to schemes of arrangement, involving mergers, and amalgamation among others, by entities who have listed their non-convertible debt securities or non-convertible redeemable preference shares.