SEBI stamp on Zee Business report! Regulator notifies easing of delisting norms in subsidiary companies

Zee Business Managing Editor Anil Singhvi earlier today had said that the market regulator Securities and Exchange Board of India (SEBI) is likely to announce an easing in delisting norms of subsidiary companies. And within 10 hours of this Zee Business exclusive report, SEBI has issued a notification about the same. 

SEBI in its statement said, "The  Board  has  decided  to  grant  exemption  from  the  Reverse  Book  Building  process (“RBB”) for delisting of listed subsidiary, where it becomes the wholly owned subsidiary of the listed parent pursuant to a scheme of arrangement. To  be  eligible  to  take  this route,  the  listed  holding  company  and  the  listed  subsidiary should be in the same line of business.  Both the companies should be compliant with the  SEBI (Listing  Obligations  and  Disclosure  Requirements)  Regulations,  2015, specifically, the regulations (no. 11, 37 and 94) pertaining to processing of the schemes of arrangement."

It further added, "To protect the interests of investors in the listed subsidiary, it has been stipulated that the votes cast by public shareholders of the listed subsidiary in favour of the proposal will be at least 2 times the number of votes cast against it in terms of the present delisting regulations."

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It  is  further  stipulated  that  the  shares  of  the  parent  listed  company  and  the  listed subsidiary  entity should be listed for at least  3  years, should not be suspended  at the time of taking this route, and the subsidiary should have been a listed subsidiary of the listed holding entity for at least three preceding years.

Informing about the amendments to SEBI (debenture trustee) Act, 1993 the market regulator said, "The Board approved the proposal of strengthening the role of Debenture Trustees (DT(s)) so as to protect the interest of debenture holders. The DT(s) shall exercise independent due diligence of the assets on which charge is being created. The DT(s) shall take required action by convening the meeting of debenture holders for enforcement of security, joining the inter-creditor agreement (under the framework specified by RBI), etc."

SEBI went on to add that DT(s) shall also carry out continuous monitoring of the asset cover including obtaining mandatory certificate from the statutory auditor on half yearly basis. Further, the issuer company shall create recovery expense fund at the time of issuance of debt securities that may be utilized by DT(s) in the event of default, for taking appropriate legal action to enforce the security.

SEBI had some good news on Mutual Fund segment too. It said, "Currently, the SEBI (Mutual Funds) Regulations, 1996 (“MF Regulations”) provide for Asset Management Companies(AMCs) and Trustees to follow a Code of Conduct. Also, under current MF Regulations, CEO is entrusted with several responsibilities. The Board after deliberation, approved the amendment of MF Regulations to introduce Code of Conduct for Fund Managers including Chief Investment Officers and Dealers of AMCs. Further, the Chief Executive Officer will be responsible to ensure that the Code of Conducti's followed by all such officers."

Watch full coverage of Anil Singhvi's exclusive report in video below:

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Allowing Mutual Fund AMCs to become self-clearing member SEBI said, "The Board approved amendment to MF Regulations to enable Asset Management Companies to become a self-clearing member of the recognized Clearing Corporations to clear and settle trades in the debt segment of recognized stock exchanges, on behalf of its mutual fund schemes."