Exchanges should clear listed firms’ scheme of arrangements

Now, a no-objection certificate from stock exchanges, the National Stock Exchanges and the BSE, will be required for listed companies for their scheme of arrangement.

Also, independent directors will have to certify that the scheme is not detrimental to the company shareholders and a valuer report will have to be tabled.

These rules are a fresh dictate of SEBI and will ensure that companies do not take shareholders for a ride and somebody is held responsible in case of lapses, experts said.

SEBI has said that trading in companies that have undergone restructuring of business or debt or any other activity under the scheme of arrangement should start in 60 days from the court order.

Companies mainly use the scheme of arrangement for debt restructuring, takeovers and for return of capital. A scheme of arrangement is a court approved agreement between a company and its shareholders or creditors. It can impact company mergers and amalgamations or even alter shareholder or creditor rights. Scheme of arrangement is initiated to bring changes in the business structure or when there are no other options for re-origination.

“A registered valuer shall be a person, registered as a valuer, having such qualifications and experience and being a member of an organization recognised as a valuation agency under the companies act,” SEBI said.