INDIA Law and Practice Contributed by: Anish Mashruwala, Utsav Johri, Megha Upadhyaya and Sahil Unadkat, JSA
their shareholding in the listed company or 20% of the total share capital of the listed company, to the listed company and every stock exchange where the shares of the company are listed. Therefore, covenants or other conditions in the financing documents that create an encum- brance on the shares or voting rights of the listed company may require disclosures under the Takeover Regulations. Any such covenants may include any borrowing limits linked to the value of listed shares, a requirement to hold a specific number or value of the listed shares and a consent requirement for disposal of the listed shares. However, the disclosure requirements will not be applicable where such encumbrance is undertaken through a depository. Disclosure of Specified Agreements The LODR Regulations require that any agree- ments entered into by the shareholders, promot- ers or promoter group entities, related parties, directors, key managerial personnel or employ- ees of a listed entity or of its holding, subsidiary or associate company, among themselves or with the listed entity or with a third party, which directly, indirectly or potentially impact or whose purpose and effect is to impact the management or control of the listed entity, are required to be disclosed to the stock exchanges, along with any amendments or alterations to such agree- ments. Public Shareholders Approval for Disposal by a Listed Entity For the purposes of providing security for any financing being availed, a sale or disposal by a listed entity of the whole or substantially whole of its undertaking (other than pursuant to a court-approved scheme of arrangement) requires the prior approval of its shareholders by way of a special resolution where the votes
cast by the public shareholders in favour of the resolution need to exceed the votes cast by pub- lic shareholders against such resolution. Further, the object and commercial rationale for carrying out such sale along with the use of the proceeds from such sale are required to be disclosed by the listed entity to its shareholders. The exemp- tion from the above requirements is available only in the case of a transaction between the listed entity and its wholly owned subsidiary whose accounts are consolidated. Issuance of Listed NCDs The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (the “NCS Regula- tions” ) govern the following issuances: • public issuances of non-convertible debt securities and non-convertible redeemable preference shares; • private placements of non-convertible securi- ties; and • listing of commercial papers. As per the NCS regulations, issuers who have been in existence for less than three years are permitted to issue and list their debt securities on a private placement basis, subject to the con- ditions that: • the issuer discloses its financial statements for such period of existence; • the issue is made on the electronic book platform; and • the issue is made only to qualified institutional buyers. The NCS Regulations provide that no call or put option can be exercised in relation to privately placed, listed NCDs prior to the expiry of 12 months from the date of their issuance.
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