Securities and Exchange board of India (Sebi) has issued a new framework for listing of NCDs (non-convertible debentures) and NCRPs (Non-convertible redeemable preference shares) following mergers and acquisitions (M&As). A listed company may seek listing of NCDs/ NCRPs issued pursuant to a scheme of arrangement only in case where the listed company is a part of such scheme and such securities are issued to the holders of specified securities of such listed entity, as per Sebi circular.
Only the NCDs/NCRPs issued to listed specified security holders will be eligible for seeking listing. However, if the same series of securities are also allotted to other investors, such securities would not be eligible for listing. A scheme of arrangement is a court approved agreement between a company and its shareholders/creditors. The minimum term of such securities would be one year.
Sebi has earlier streamlined regulatory framework for scheme of arrangement like merger and acquisitions by listed companies to check any possible evading of norms and prevent firms from seeking direct approval of National Company Law Tribunal for such deals.
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