SOP for Listed Subsidiary Companies for Getting Delisted through Scheme of Arrangement

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Sep 30, 2021

SOP for Listed Subsidiary Companies for Getting Delisted through Scheme of Arrangement

The SEBI (Delisting of Equity Shares) Regulations, 2021 introduced special provisions for a subsidiary company to get delisted pursuant to a scheme of arrangement wherein the listed holding company and the listed subsidiary company are in the ‘same line of business’. In this regard, SEBI, by a Circular dated July 6, 2021, has specified the following key criteria for two companies to be considered in the ‘same line of business’:

i. The principal economic activities of the companies should be the same 3-digit numeric code under the National Industrial Classification (NIC) Code, 2008;

ii. Not less than 50% of revenue from the operations of the companies must come from same line of business as per last audited financial results; and

iii. Not less than 50% of the net tangible assets of the companies must have been invested in same line of business.

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