Companies to face SEBI’s tightened merger regime

By Iqbal Khan and Tanavi Mohanty, Shardul Amarchand Mangaldas

26 February 2017

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The Securities and Exchange Board of India (SEBI), in its meeting on 14 January, proposed revisions to the regulatory framework governing the merger of an unlisted company with a listed company.

The existing regime comprises

(a) the SEBI circular dated 30 November 2015 setting out the guidelines for schemes of arrangement/merger of listed entities, and relaxation from the requirements under the Securities Contracts (Regulation) Rules, 1957; and (b) the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Iqbal Khan Partner Shardul Amarchand Mangaldas — Iqbal Khan
Partner
Shardul Amarchand
Mangaldas

Many companies view a merger with a smaller listed entity as a convenient and shorter route to listing as compared to an initial public offering (IPO). SEBI’s proposed revisions aim at ensuring a fair merger of a large unlisted company with a smaller listed company, where such merger is not detrimental to the interests of public shareholders of the listed company.

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Iqbal Khan is a partner and Tanavi Mohanty is an associate at Shardul Amarchand Mangaldas. The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect the official view or position of the firm.