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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

SOP for listed subsidiary company desirous of getting delisted through a Scheme of Arrangement

06-Jul-2021 | SEBI/HO/CFD/DIL1/CIR/P/2021/0585

SEBI, vide notification dated June 10, 2021, had 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 inserted with respect to a listed holding company and the listed subsidiary company who are in the 'same line of business'.

Now, SEBI has clarified the criteria that needs to be fulfilled by the listed holding company and the listed subsidiary company for the purposes of defining 'same line of business' such as-
i. The principal economic activities of both Holding and Subsidiary Company should be 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 last audited annual financial results submitted by both the companies.
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.
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.

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