SEBI issues SoP for listed subsidiary company desirous of getting delisted through Scheme of Arrangement
SEBI issues Standard Operating Procedure for listed subsidiary company desirous of getting delisted through a Scheme of Arrangement wherein the listed parent holding company and the listed subsidiary are in the same line of business.
SEBI Circular No. SEBI/HO/CFD/DIL1/CIR/P/2021/0585
SEBI, vide notification dated June 10, 2021, has notified the amendments made to the SEBI (Delisting of Equity Shares) Regulations, 2021 wherein special provisions for a listed subsidiary company getting delisted through a scheme of arrangement have been inter-alia inserted with respect to a listed holding company and the listed subsidiary company who are in the ‘same line of business’.
SEBI has clarified that for the purposes of defining ‘same line of business’, the following criteria need to be fulfilled by the listed holding company and the listed subsidiary company:
(i) The principal economic activities of both Holding company and Subsidiary Companyare under the same Group (3-digit numeric code) under the National Industrial Classification (NIC) Code 2008.
(ii) Not less than 50% of revenue from the operations of the listed holding and listed subsidiary company must come from the same line of business as per last audited annual financial results submitted by both the companies in compliance with SEBI (LODR) Regulations, 2015.
(iii) Not less than 50% of the net tangible assets of the listed holding and listed subsidiary must have been invested in the same line of business as per last audited annual financial results submitted by both the companies in compliance with SEBI (LODR) Regulations, 2015.
(iv) In case of change of name of the listed entities, within the last one year, at least fifty percent of the revenue, calculated on a restated and consolidated basis, for the preceding one full year has to be earned by it from the activity indicated by its new name.
(v) The listed holding company and the listed subsidiary have to provide a self certification with respect to both the companies being in the same line of business.
It has been further provided that all of the above mentioned criteria shall be certified by the Statutory Auditor and SEBI Registered Merchant Banker.
Further, In terms of the SEBI (Delisting of Equity Shares) Regulations, 2021, the shares of the listed holding company and the subsidiary company shall be listed for at least 3 years and the subsidiary company shall be a listed subsidiary of the listed holding company for a period of 3 years.