CIRCULAR
SEBI/HO/CFD/DIL1/CIR/P/2021/0585 Date: July 06, 2021
To
All Listed Entities who have listed their equity and convertibles
All the Nationwide Stock Exchanges
Dear Sir/Madam,
Sub: Standard Operating Procedure for listed subsidiary company desirous of
getting delisted through a Scheme of Arrangement wherein the listed parent
holding company and the listed subsidiary are in the same line of business.
1. SEBI, vide notification dated June 10, 2021, has notified the amendments made to
the SEBI (Delisting of Equity Shares) Regulations, 2021 wherein, in Chapter VI,
Part C, and Regulation 37, special provisions for a listed subsidiary company
getting delisted through a scheme of arrangement have been inter-alia inserted
with respect to a listed holding company and the listed subsidiary company who
are in the ‘same line of business’.
2. It is hereby clarified that for the purposes of defining ‘same line of business’, the
following criteria need to be fulfilled by the listed holding company and the listed
subsidiary company: -
i. The principal economic activities of both Holding company and Subsidiary
Company are under the same Group (3-digit numeric code) under the
National Industrial Classification (NIC) Code 2008.
ii. Not less than 50% of revenue from the operations of the listed holding and
listed subsidiary company must come from the same line of business as per
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last audited annual financial results submitted by both the companies in
compliance with SEBI (LODR) Regulations, 2015.
iii. Not less than 50% of the net tangible assets of the listed holding and listed
subsidiary must have been invested in the same line of business as per last
audited annual financial results submitted by both the companies in
compliance with SEBI (LODR) Regulations, 2015.
iv. In case of change of name of the listed entities, within the last one year, at
least fifty percent of the revenue, calculated on a restated and consolidated
basis, for the preceding one full year has to be earned by it from the activity
indicated by its new name.
v. The listed holding company and the listed subsidiary have to provide a self
certification with respect to both the companies being in the same line of
business.
3. All of the above mentioned criteria (i.e. Sr. No. 2 i to 2 v) shall be certified by the
Statutory Auditor and SEBI Registered Merchant Banker.
4. In terms of Regulation 37(2)(e) and (f) of the SEBI (Delisting of Equity Shares)
Regulations, 2021, the shares of the listed holding company and the subsidiary
company shall be listed for at least 3 years and the subsidiary company shall be a
listed subsidiary of the listed holding company for a period of 3 years.
5. The recognized stock exchanges are directed to bring the provisions of this circular
to the notice of the listed companies and also to disseminate the same on their
website.
6. This circular is issued in exercise of powers conferred by Section 11(1) of the
Securities and Exchange Board of India Act, 1992 and Regulations 11, 37 and 94
of SEBI (Listing Obligations and Disclosure Requirements) Regulations, to protect
the interests of investors in securities and to promote the development of, and to
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regulate the securities market.
7. A copy of this circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework/Circulars”.
Yours faithfully,
Yogita Jadhav
General Manager
yogitaj@sebi.gov.in
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