Thursday, October 12, 2017

Stepwise process / Checklist for Scheme of Amalgamations

Stepwise process / Checklist for Scheme of Amalgamations under Companies Act, 2013 and SEBI Regulations

Regulatory Framework

       Companies Act, 2013 – [Sec 230-232]
       National Company Law Tribunal Rules, 2016
       Foreign Exchange Management Act, 1999
       Indian Accounting Standards
       Indian Stamp Act 1899, as applicable to relevant State
       Competition Act, 2002
       Income Tax Act, 1961
       SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
       SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
       SEBI Circular(s) on Scheme of Amalgamations

Approvals required

       Board of Directors of the companies
       SEBI / Stock exchange(s), where the companies are listed
       Shareholders of the companies
       Creditors of the companies
       National Company Law Tribunal
       Reserve Bank of India & Competition Commission, if required

Documents required

       Memorandum and Articles of Association of the companies
       Audited Financials
       Statutory Records of transferor company(ies) till date.
       Minute Books transferor company(ies) till date.
       List of Directors
       List of Shareholders / Shareholding Pattern

Stepwise procedure

Board Approval
       Listed Company(ies) to intimate the date of the Board Meeting in which the in-principle proposal for amalgamation will be considered to the stock exchange(s) 
       Convene the Board Meetings of Transferor / Transferee companies for considering the proposal of amalgamation
o   In-principle approval for amalgamation
o   Appoint Chartered Accountants for valuation
o   Registered valuer / Merchant Bankers for fairness opinion
o   Company Secretaries / Advocates for representing the matter before the Hon’ble NCLT
o   Delegate powers to a sub-committee of the Board, if any.
   Listed Company(ies) to disclose the outcome of the Board Meeting to the stock exchange(s)
  Independent Valuation and Fairness Opinion to be obtained; Draft Scheme of Amalgamation to be ready
       Listed Company(ies) to intimate the date of the Board Meeting in which the Scheme of Amalgamation and Share Exchange Ratio would be considered
       Conduct Audit Committee / Board Meetings of the Companies for considering
o   Valuation Report
o   Fairness Opinion
o   Designated Stock Exchange
   Listed Company(ies) to disclose the outcome of the Board Meeting to the stock exchange(s)
o   Share Exchange Ratio & other details as per continuous disclosure requirements Reg. 30 of SEBI (LODR) Regulations, 2015 (Part A of Schedule III)

Stock Exchange / SEBI approval

    Listed company(ies) not to file the Scheme with NCLT without obtaining Observation Letter / No Objection letter from the stock exchange(s)
     Application to the Stock exchange(s) where the companies are listed under Reg.37 for obtaining Observation Letter / No Objection letter to the proposed Scheme.
      Application to be accompanied by the documents specified in SEBI Circular on Scheme of Arrangements.
  Documents submitted to the stock exchange(s) to be uploaded on the Company’s website.
     Provide response to clarifications sought by the stock exchange(s), if any.
   Obtain Observation Letter / No Objection letter from the stock exchange(s) to the proposed Scheme of Amalgamation
     Upload the Observation Letter / No Objection letter on the Company’s website within 24 hours of receipt

NCLT Approval

  Application to NCLT seeking directions, inter alia, for dispensing / convening shareholders’ and creditors’ meetings; publishing advertisements; appointment of chairpersons.
      Obtain NOC from Secured Creditors.
      Obtain Orders from NCLT.
       If ordered for convening the meetings, convene board meetings to seek approval of -
o   Supplementary accounting statements, if required.
o   Approval of the Notices of the Tribunal Convened Meetings to be issued to the shareholders and creditors
o   Notice to be issued pursuant to SEBI Circular on Scheme of Arrangements seeking approval of Public Shareholders through e-voting
       Printing and Dispatch of Notices to shareholders / creditors – physical and electronic
o   Notice with all documents to be sent to the offices of ROC, Official Liquidator, Central Government (Regional Director), Income Tax authorities, RBI, Stock exchange(s) and any other regulatory authorities, as directed by NCLT. 
    Intimate stock exchange(s) on the dispatch of notices and also submit the notices to the stock exchange(s).
      Upload the complete Notice(s) on the Company’s website
      Publication of advertisement in Newspapers about the meetings  
    Upload the newspaper advertisement the Company’s website and submit the same to the stock exchange(s) 
      Convene the meetings / e-voting
o   NCLT convened meeting Resolution(s) to be passed with Special Majority, i.e., majority of members present (more than 50%) and holding 3/4th in value of voting rights. Result to be decided through Poll and also E-voting for Listed entities.
o   SEBI requirement - Postal Ballot / e-voting - votes cast by the public shareholders in favour are more than the number of votes cast by the public shareholders against it – E-voting (Postal Ballot may also be provided).
    Outcome of Meetings / E-voting to be intimated to the stock exchange(s) within 48 hours of conclusion of the Meeting.
     Submit responses to any information / clarifications sought by the Official Liquidator and Central Government (RD Office)
      Reports of the Chairman to be submitted to the NCLT along with the attendance slips & proxy forms in original within 7 days from the date of holding the meeting.
      Company Petitions seeking orders of the NCLT for amalgamation of the companies to be filed with the NCLT within 7 days from the date of filing of the Chairman’s report.
       Filing of MGT-14 with ROC within 30 days of approval of the Resolutions.
       Date of hearing to be fixed by NCLT Registry
       Obtain NOCs from Income Tax authorities / RBI / CCI, if required.
       Publish Notice of Hearing in the newspapers seeking objections, if any, to the Scheme.
       Upload the newspaper advertisement the Company’s website and submit the same to the stock exchanges
       Counsel to file the responses to the Notice with NCLT. 
       Petition to be admitted by NCLT and notices to be served on Official Liquidator and Central Government (Regional Director).
       Submission of reports on the Scheme by the offices of the Regional Director and the Official Liquidator to the NCLT.
       Hearing of the matter by the NCLT.
       NCLT to pronounce the Orders.

Post NCLT approval

       Obtain Certified True Copy of the Order from the NCLT.
       Payment of Stamp Duty, as per the Stamp Act, if required.
o   Adjudication of the Court Order
o   Payment
       Inform SEBI / Stock exchange(s) on receipt of the Order
       Post receipt of the Certified True Copy of the Order, documents to be sent to the Designated Stock Exchange, as per SEBI Circular on Amalgamations.
       Filing of INC 28, along with Stamp Duty payment challan with the ROC.
•    Stock Exchange(s) to take note of NCLT Order and inform the Company.
       Board to note the NCLT Order and fix the Record Date
       Intimate Record Date to Stock exchange(s) (7 working days’ notice)
       Allotment of shares
       Intimation to the Stock Exchange(s) on Allotment
       Admit new shares issued with the Depositories
       Listing Application to the Stock Exchange(s)
       Submit FC-GPR through Authorized Dealer Bank, if required.
       File PAS-3 with the ROC within 30 days of Allotment.
       Obtain Listing and Trading approval
   Intimations to all other concerned offices, including statutory authorities, with Certified copies of NCLT orders.
       Any specific compliances stipulated in the Amalgamation Order to be adhered to.



Tuesday, February 23, 2016

Approval process for Related Party Transactions


Approval Process for Related Party Transactions


Related Party Transaction approval process under Companies Act, 2013, Rules thereon and SEBI (Listing Obligations and Disclosure Requirements), 2015 for Listed and Unlisted Public Companies and Private Companies.



Flow chart credit: http://www.ey.com/IN/en/Issues/Governance-and-reporting/EY-Compass-on-Companies-Act-2013/EY-cfo-companies-act-2013-related-party-transactions  

Listed Company

Ø  Applicable Provisions
§  Section 188 of the Companies Act, 2013, as amended
§  Companies (Meetings of Board and its Powers) Rules, 2014, as amended
§  SEBI (Listing and Disclosure Requirements) Regulations, 2015 (Listing Regulations, 2015)

Ø  Regulation 2(zc) of the Listing Regulations,2015 defines Related Party Transactions (“RPTs”) as a transfer of resources, services or obligations between a company and a related party, regardless of whether a price is charged.

Ø  All RPTs of Listed Companies require prior approval of the Audit Committee. 

Ø  RPTs exceeding 10% of annual turnover as per the last audited accounts would require shareholders’ approval through Special Resolution.

Ø  The related parties shall abstain from voting on such resolutions.


Unlisted Public Company / Private Company

Ø  Applicable Provisions
§  Section 188 of the Companies Act, 2013, as amended
§  Companies (Meetings of Board and its Powers) Rules, 2014, as amended

Ø  RPTs other than those entered into by the company other than in its ordinary course of business or which are not on an arm’s length basis require approval of the Board. 

Ø  RPTs exceeding threshold limits provided under Rule 15(3) would require prior approval of the shareholders’ through Ordinary Resolution.

Ø  The related parties shall abstain from voting on such resolutions, except in case of private companies.

Ø  The Turnover or Net Worth shall be on the basis of the Audited Financial Statement of the preceding financial year.

Materiality threshold for Unlisted Public Company / Private Company
Transactions
Materiality threshold
Sale, purchase or supply of any goods or materials
> 25% of turnover
selling or otherwise disposing of, or buying, property of any kind
>10% of net worth
leasing of property of any kind
>10% of net worth or 25% of turnover
availing or rendering of any services
>10% of net worth
appointment to any office or place of profit in the company, its subsidiary company or associate company
monthly remuneration > Rs.2.5 lacs
underwriting the subscription of any securities or derivatives thereof, of the company
remuneration > 1% of net worth
appointment of any agent for purchase or sale of goods, materials, services or property
No materiality threshold prescribed

Transactions between Holding Company and Wholly owned subsidiary exempted from the requirement of Section 188  



Friday, February 19, 2016

Checklist - Mandatory Disclosures to be made on the Website for Listed Companies


Checklist on Disclosures on the website of Listed Companies
  
ü  The Companies Act, 2013 and Rules thereon (“the Act”)
ü  SEBI Listing (Obligations & Disclosure Requirements) Regulations, 2015 (“LODR”)
ü  SEBI (Prohibition of Insider Trading) Regulations, 2015


Disclosure
Frequency for uploading / updation
Provision source



Details of business
Ongoing
LODR
Composition of various committees of board of directors
Event based
LODR
Details of familiarization programmes imparted to independent directors
Event based
LODR
Notice of board meeting for financial results
Quarterly
LODR
Financial results, pursuant to board approval
Quarterly
LODR
Complete copy of Annual Report & Subsidiary financials
Annual
Act & LODR
Shareholding pattern
Quarterly
LODR
Details of agreements with the media companies and/or their associates
Event based
LODR
Schedule of analyst or institutional investor meet
Event based
LODR
Presentations made to analysts or institutional investors
Event based
LODR
Contact information of the designated officials responsible for handling investor grievances
Ongoing
LODR
Email address for grievance redressal and other relevant details
Ongoing
LODR
New name and the old name of the listed entity for a continuous period of one year
Event based
LODR
Unpaid Dividend Account details
Annually
Act
Material Events – Disclosed to the Stock Exchanges
Ongoing
LODR
Notice of Closure of register of members
Annually
Rule 10(1)  Management & Administration Rules
General Meeting / e-voting Notice
Annually
Rule 18(3)(ix) & Rule 20 Management & Administration Rules
General Meeting / e-voting Results & Scrutinizer Report
Annually
Rule 20 (xvi) of Management & Administration Rules
Postal Ballot / e-voting Notice
Event based
Rule 22(4) & Rule 20(4)(ii), Management & Administration Rules
Postal Ballot / e-voting Results & Scrutinizer Report
Event based
Rule 22(13) & Rule 20(xvi), Management & Administration Rules
Public Notice of GM/Postal Ballot related e-voting information
Event based
Proviso to Rule 22(5) Management & Administration Rules
Special Notice
Event based
Rule 23, Management & Administration Rules
Notice of candidature of a person for directorship
Event based
Rule 13(2), Appointment & qualification of Directors Rules
Notice of resignation of Director
Event based
Rule 15, Appointment & qualification of Directors Rules
Notice of creditors / shareholders meetings pursuant to Chapter XV
Event based
Proviso to Sec 230(3) of the Act
Advertisements in Newspapers:


(a)   notice of meeting of the board of directors where financial results shall be discussed
Quarterly
LODR
(b)   financial results
Quarterly
LODR
(c)   Statement of deviations as per Reg.32
Event based
LODR
(d)   notices given to shareholders by advertisement
Event based
LODR



Transcripts or records of proceedings of meetings with analysts and other investor relations conferences
Event based
SEBI (Prohibition of Insider Trading) Regulations, 2015



Policies
Event based

CSR Policy

Sec 135 of the Act
Material events disclosure Policy

LODR
Terms and conditions of appointment of independent directors

Act & LODR
Code of conduct of board of directors and senior management personnel

LODR
Details of establishment of vigil mechanism/ Whistle Blower policy

Act & LODR
Criteria of making payments to non-executive directors (Nomination & Remuneration Policy)

Act & LODR
Policy on dealing with related party transactions

LODR
Policy for determining ‘material’ subsidiaries

LODR
Code of practices and procedures
for fair disclosure of unpublished price sensitive information

SEBI (Prohibition of Insider Trading) Regulations, 2015