The Securities and Exchange Board of India (“SEBI”) through a circular dated 12th September, 2019 mandates all listed entities to submit a ‘Report on the Unpaid Dues’ to stock exchanges while submitting any scheme of arrangement/ amalgamation/ merger/ reduction on capital etc. This report should contain details of pending dues of listed entities towards SEBI, Stock Exchanges and Depositories. Submission of Report on the Unpaid Dues along with all necessary documents to Stock Exchanges is mandatory for obtaining an ‘Observation Letter’ or ‘No Objection Letter’ which is an essential document for getting any scheme of arrangement/amalgamation/merger/reduction on capital etc to be approved by any court or tribunal.
Background:
SEBI placed certain obligations with respect to Scheme of Arrangement of Listed Entities through SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Securities Contracts (Regulation) Rules, 1957. Furtherance to the same SEBI specified through its circular dated 10th March, 2017 that all listed entities shall mandatorily submit the following documents to stock exchanges for obtaining an ‘Observation Letter’ or ‘No Objection Letter’ with respect to any scheme of arrangement/amalgamation/merger/reduction on capital etc to be submitted before any court or tribunal.
- Draft Scheme of arrangement/ amalgamation/ merger/ reconstruction/ reduction of capital, etc.;
- Valuation Report;
- Report from the Audit Committee recommending the Draft Scheme, taking into consideration, inter alia, the Valuation Report. The Valuation Report is required to be placed before the Audit Committee of the listed entity;
- Fairness opinion by a SEBI Registered merchant banker on valuation of assets/ shares done by the valuer for the listed entity and unlisted entity;
- Pre and post amalgamation shareholding pattern of unlisted entity;
- Audited financials of last 3 years (financials not being more than 6 months old) of unlisted entity;
- Auditor’s Certificate;
- Compliance Report based on requirements specified under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Along with the above referred documents, now the listed entities are also mandated to submit a ‘Report on the Unpaid Dues’ mentioning the details of dues payable to SEBI, Stock Exchanges and Depositories on account of fines/penalties etc. The listed entities further to ensure that all such unpaid dues have been cleared before it files any scheme with any stock exchange. Any misstatement or false statement made in the ‘Report on the Unpaid Dues’ would attract punitive action against such listed entities.
Source: Securities and Exchange Board of India
