SEBI gives clarity on NOC submission from banks, financial institutions for mergers and demergers of listed companies

On Monday, Securities and Exchange Board of India (Sebi) provided clarity on the timing of submission of No Objection Certificate (NOC) from banks and financial institutions in respect of draft schemes pertaining to mergers and demergers filed by listed companies with the stock exchanges.

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Under the rules issued by Sebi, listed entities desirous of undertaking a scheme of arrangement are required to submit certain documents to the exchanges.

It must be noted that the listed entities are required to submit the NOC from the lending scheduled commercial banks/ financial institutions/ Debenture Trustees (DTs).
In its circular, Sebi clarified that the NOC from commercial banks/ financial institutions/ DTs shall be submitted before the receipt of the no objection letter from the stock exchange.

There are certain requirements that need to be fulfilled before the scheme of arrangement is submitted for sanction by the National Company Law Tribunal.
This includes that listed entities choose one of the stock exchanges having nationwide trading terminals as the designated stock exchange to coordinate with Sebi.

Scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors.

(With inputs from PTI)