India: Disclosure of Scheme involving merger of wholly owned subsidiary or its division with Parent Company - SSRANA

India: Disclosure of Scheme involving merger of wholly owned subsidiary or its division with Parent Company

February 19, 2019
VOL IV
ISSUE No. 06
February 19, 2019

 


 

India: Disclosure of Scheme involving merger of wholly owned subsidiary or its division with Parent Company

The Securities and Exchange Board of India (hereinafter referred to as the ‘SEBI’) in order to consolidate the conditions under different securities’ listing agreements in one single regulation issued SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015 (hereinafter referred to as the “LODR Regulations”). Regulation 37 of the LODR Regulations requires a listed entity desirous of undertaking a scheme of arrangement or involved in a scheme of arrangement to file the draft scheme of arrangement with the relevant stock exchange (s) for obtaining an ‘observation letter’ or a ‘no-objection letter’, before filing such scheme with any court or tribunal. The listed entity cannot file any scheme of arrangement under the Companies Act, 1956 or the Companies Act, 2013, whichever applicable, with any Court or Tribunal unless it has obtained observation letter or No-objection letter from the stock exchange(s).

SEBI Circular dated November 30, 2015

SEBI, in furtherance of this regulation issued a circular[1] on November 30, 2015, stating additional requirements in order to achieve the intent of regulations. These requirements made no distinction between the scheme of arrangement of wholly owned subsidiary and other listed entities. Thereafter, SEBI amended the LODR Regulations vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2017 on February 15, 2017, to provide that nothing contained in the LODR regulation shall apply to draft schemes which solely provide for merger of a wholly owned subsidiary with its holding company. The amendment further provided that such draft schemes shall be filed with the stock exchanges for the purpose of disclosures.

SEBI Circular dated March 10, 2017

Later on March 10, 2017, SEBI vide a circular[2] revised the regulatory framework for such scheme of arrangement. This circular governs all schemes filed after March 10, 2017. It provides the requirements that any listed company must comply in order to obtain observation letter or No-objection letter from the stock exchange(s). In accordance with the amendment, the circular states that it shall not apply to schemes which solely provides for merger of a wholly owned subsidiary with the parent company. However, such draft schemes shall be filed with the Stock Exchanges for the purpose of disclosures and the Stock Exchanges shall disseminate the scheme documents on their websites. However, this circular only provided exception of the merger of wholly owned subsidiary with the parent company and did not provide the exception for its division such as demerger or hiving off with the parent company.

SEBI Circular dated January 03, 2017

Thereafter SEBI amended the previous circular dated March 10, 2017, vide another circular[3] on January 3, 2018. This circular provides that the Provisions of earlier circular dated March 10, 2017, shall not apply to schemes which solely provides for merger of a wholly owned subsidiary or its division with the parent company. However, such draft schemes shall be filed with the Stock Exchanges for the purpose of disclosures and the Stock Exchanges shall disseminate the scheme documents on their websites.

Conclusion/ Analysis

SEBI has further relaxed the requirements under Regulation 37 of the LODR Regulations. This amendment promotes the ease of doing business and facilitates faster process.

[1] CIR/CFD/CMD/16/2015 dated November 30, 2015 available at https://www.sebi.gov.in/legal/circulars/nov-2015/schemes-of-arrangement-by-listed-entities-and-ii-relaxation-under-sub-rule-7-of-rule-19-of-the-securities-contracts-regulation-rules-1957_31143.html.

[2] CFD/DIL3/CIR/2017/21 dated March 10, 2017 available at https://www.sebi.gov.in/legal/circulars/mar-2017/circular-on-schemes-of-arrangement-by-listed-entities-and-ii-relaxation-under-sub-rule-7-of-rule-19-of-the-securities-contracts-regulation-rules-1957_34352.html.

[3] CFD/DIL3/CIR/2018/2 dated January 03, 2018 available at https://www.sebi.gov.in/legal/circulars/jan-2018/circular-on-schemes-of-arrangement-by-listed-entities-and-ii-relaxation-under-sub-rule-7-of-rule-19-of-the-securities-contracts-regulation-rules-1957-_37265.html.


 


 

India: Government of Haryana Grants Exemption from Periodic Renewals under Shops and Commercial Establishment Act

Introduction

The Punjab Shop and Commercial Establishments Act, 1958 is a state enactment which provides for the regulation of conditions of work and employment in shops and commercial establishments. The Act provides safety, health and welfare provisions that the employer in such establishment is required to implement. The owner or the authorized person of the establishments covered under the Act is required to register under the Act.

The Act provides for the regulation of the opening and closing time as well as weekly holiday. The primary aim of the Act is to ensure safety, health and welfare for the employees in such establishments. The Act prohibits employment of children and employment of women during night hours. The Act further provides conviction and monetary penalty for the violation of safety, health and welfare provisions by the employer.

Periodic renewal of Registration certificate

The Act provides for periodic renewal of Registration certificate by March 31, of every year with a grace period of thirty days. The Government of Haryana wide notification[1] dated November 21, 2018, has exempted commercial establishments and establishments from the requirement of periodic renewal of the Registration certificate.

Commercial Establishments and Establishments

“Establishment” as per the Act includes both commercial establishment as well as a shop. “Commercial establishment” is defined under the Act as any premises wherein any business, trade or profession is carried on for profit and includes journalistic or printing establishment and premises in which business of banking, insurance, stocks and shares, brokerage and produce exchange is carried on or which is used as hotel, restaurant, boarding or eating house, theatre, cinema or other place of public entertainment or any other place or any other place as may be declared. “Shop” is denoted as any premises where any trade or business is carried on or where services are rendered to customers and includes offices, store-rooms, godowns, sale-depots or ware-houses, whether in the same premises or otherwise, used in connection with such trade or business.

Analysis

The notification issued by the labor department of Haryana Government exempts establishments and commercial establishment from the requirement of periodic renewal of registration certificate mandatorily required to carry own the business by the establishments covered under the Act. Earlier, the owner of these establishments required to renew their registration certificate by March 31, with a grace period of 30 days.

[1] Notification No. 11/23/2018-4Lab dated 21.11.2018 available at http://storage.hrylabour.gov.in/uploads/labour_laws/Y2018/Dec/W1/D06/1544074366.PDF .

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