CAIRR Update November 18, 2022

November 18, 2022

Summary of the Notification and Circular issued by SEBI on 14/11/2022 and 17/11/2022 respectively

I. SEBI notifies amendments to Listing Regulations relating to Independent Directors, further issue of securities,submission of Financial result and scheme(s) of arranagement w.e.f 14th November 2022

1. Independent Directors
   The appointment, re-appointment or removal of an independent directors is subject to the approval of shareholders by way of a special resolution. However, if these resolutions fail to get the requisite majority, but the votes cast by public shareholders in favour of the resolution exceed the votes cast against it, then the appointment, re-appointment or removal of such an independent director shall be deemed to have been approved by special resolution.
2. Further Issue of securities
   Where the listed entity has appointed a monitoring agency to monitor utilisation of proceeds of a public issue, rights issue, preferential issue or qualified institutions placement (as opposed to only public or rights issue earlier), it shall place the report received from the agency before the audit committee on a quarterly and annual basis, upon its receipt and submit the same to the stock exchange within 45 days from the end of each quarter.
3. Financial Results
   a) The un-audited quarterly financial results along with limited review report prepared by the statutory auditors, who may in some cases be the Comptroller and Auditor General of India are to be submitted within 45 days of the end of each quarter, except the last quarter.
   b) Listed entities can no longer intimate to the exchange about their intention to file its annual audited results within sixty days from the end of the financial year in lieu of submitting their financial results for the last two quarters.
   c) The listed entity shall submit a statement of assets and liabilities and statement of cash flows as at the end of every half year, by way of a note, along with the financial results.
   d) The listed entity shall submit to the stock exchange, along with the quarterly financial results, a statement indicating the utilisation of the issue proceeds and any material deviation of non-convertible securities which could earlier be submitted within 45 days from the end of the quarter
   e) If the listed entity has submitted both standalone and consolidated financial results, to the stock exchange, it shall publish consolidated financial results along with the line items referred to in regulation 52(4) of LODR, in the newspaper.
4. Scheme of Arrangement
   a) Entities with listed non-convertible debt securities or non-convertible redeemable preference shares, that intend to undertake a scheme of arrangement shall file the draft scheme of arrangement with the stock exchanges. Upon sanction of the Scheme by the National Company Law Tribunal (NCLT), the listed entity shall submit documents* specified in the Regulation 59A of LODR, to the stock exchange and remit a non-refundable fee payable to SEBI
   *It is to be noted that the validity of the No-objection letter shall be six months from the date of issuance, within which the draft scheme of arrangement shall be filed by the listed entity with NCLT.
   b) These regulations shall not apply to a restructuring proposal approved as part of a resolution plan by the NCLT under the IB Code 2016.
   c) Any listed entities which do not fall within the definition of “company” under the Companies Act, 2013 shall transfer any amount in the escrow account that remains unclaimed for seven years to the Investor Protection and Education Fund.

Click here to view SEBI Notification

II. SEBI issues a circular notifying requirement for scheme(s) of arrangement by entities who have listed their Non-Convertible Debentures (NCDs)/ Non-Convertible Redeemable Preference Shares (NCRPS)

Key Highlights 

Following are the requirements for scheme(s) of arrangement by entities who have listed their NCDs/ NCRPS:

1. Choosing a Designated Stock Exchange

2. Submission of Documents like : Draft scheme of arrangement/ amalgamation/ merger/ reconstruction, Valuation Report, Fairness opinion on the valuation of assets, Report from the board of directors of the listed entity recommending the draft scheme, Audited financials for the last 3 years, Auditor’s Certificate, Detailed Compliance Report certified by the Company Secretary, Chief Financial Officer and the Managing Director ,No Objection Certificate and other declarations.

3. Fulfilling conditions for schemes of arrangement involving unlisted entities

• The listed entity shall include information pertaining to the unlisted entity involved in the scheme in the format specified for abridged prospectus
• Unlisted entities can be merged with a listed entity only if the listed entity is listed on a Stock Exchange having nationwide trading terminals and due diligence of the disclosures made is conducted by SEBI registered merchant banker.
• The Report on Complaints/ Comments received, and Report on the Unpaid dues/ fines/ penalties are to be filed with the Stock Exchanges as prescribed in the circular

4. Disclosing information on the website and in the scheme of arrangement detailed in the circular

5. Issuing Notices or proposals to the holders of NCDs/ NCRPS for seeking approval of scheme

Click here to view SEBI Circular