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.