SEBI Informal Guidance Note dated June 03, 2019 (SEBI/HO/CFD/DIL/OW/3679/2019).
Subject: Informal guidance under the SEBI (Informal Guidance) Scheme, 2003 {Scheme} in the matter of VC Corporate Advisors Pvt. Ltd. under SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2018, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011.
FACTS
- Regulation 3 of the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2018 (lCDR Regulations, 2018) inter-alia specifies about applicability of the Regulations for various corporate actions in the nature of further issues and specifies that such corporate actions as allowed and applicable under the SEBI ICDR Regulations, 2018, pertains to Listed issuer, viz. entities defined under Regulation2(1)(dd).
- Regulation 2(1)(dd) of the SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2018 (lCDR Regulations, 2018) states that “listed issuer” means an issuer whose equity shares are listed on a recognised stock exchange having nationwide trading terminals.
- Regulation 2(1)(ggg) of the ICDR Regulations, 2018, states that “stock exchange” means any recognised stock exchange having nationwide trading terminals chosen by the issuer on which securities of an issuer are listed or proposed to be listed for the purpose of a particular issue of specified securities under these regulations, other than an SME exchange;
Question
- Companies which are exclusively listed on a Recognized Regional Stock Exchange such as the Calcutta Stock Exchange Limited not having nationwide trading terminals, and are willing to issue further shares through Preferential Issue/Bonus Issue, etc. Whether such companies are to be treated as listed issuer as per ICDR, 2018?.
Some of the Points raised in the Note
- Companies not listed on a stock exchange having nationwide trading terminals, they are not covered under the definition of Listed Issuer and treated to be outside the ambit of the ICDR, 2018.
- Other SEBI Regulations, for instance, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended ( LODR Regulations, 2015) continue to define listed entity as company listed at recognised Stock Exchange without mentioning the requirement of being particularly listed at nationwide stock exchange.
- whether the provisions of other SEBI Regulations viz, LODR Regulations 2015, SAST Regulations, 2011 etc. continue to be applicable to Companies listed solely at Calcutta Stock Exchange Limited being listed for the purpose of one set of SEBI Regulations and not considered as listed for the purpose of other SEBI Regulations.
SEBI’s Views
- the provisions related to ‘preferential issue’ and ‘bonus issue’ by a “listed issuer” are dealt under ICDR Regulations, 2018 (regulation 3-applicability of the regulations). Accordingly, the companies proposing to raise funds by way of a preferential issue and/or bonus issue, even if listed on recognized stock exchange not having nationwide terminal. would have to comply with the provisions with respect to ‘preferential issue’ and ‘bonus issue’ as laid down under Chapter V and Chapter XI of the ICDR Regulations, 2018, respectively.
- LODR mandates continuous disclosure requirements for listed companies which have to be complied with irrespective of the Exchange on which it is listed, as the said regulations do not mention stock exchanges having nationwide terminals.
- SAST Regulations govern the framework of acquisition of shares and are applicable for all listed companies irrespective of the Exchange on which they are listed, as the said regulations do not mention stock exchanges having nationwide terminals.
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