The Securities and Exchange Board of India has made it mandatory for companies to seek approval from stock exchanges before filing schemes for merger, restructuring or reduction of capital before high court.
In a circular, the regulator has asked the bourses to amend the listing agreement regarding disclosure pertaining to schemes of arrangement for merger amalgamation or reconstruction filed before the court.
Sebi said in clause 24 of the listing agreement, three new sub-clauses should be added which makes it mandatory for company to agrees that "it shall file any scheme/petition proposed to be filed before any court or tribunal under sections 391, 394 and 101 of the Companies Act, 1956, with the stock exchange, for approval, at least a month before it is presented to the court or tribunal."
Thus, it would now require companies to file the scheme with exchanges one month before filing with high court for approvals of such schemes.
This requirement will prevent several malpratices in the maker including back-listing, delisting of securities without following rules laid down by Sebi.
Sebi circular said that it has come to its notice that several listed companies were flouting securities laws while seeking approval for such schemes from high court under Sec 391, 394 and 101 of Companies Act.
"In order to ensure that listed companies do not in anyway violate or override or circumscribe the provisions of securities laws or the stock exchange requirements, it has been decided to make suitable amendments in the listing agreement," the circular said.
