This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our PRIVACY POLICY for more information on the cookies we use and how to delete or block them.

Transaction Tax Alert - Norms for listing of NCRPS / NCD issued pursuant to Scheme of Arrangement

30 May 2017

SEBI prescribes norms for listing of Non-Convertible Redeemable Preference Shares (‘NCRPS’) / Non-Convertible Debentures (‘NCDs’) issued pursuant to a Scheme of Arrangement (‘Scheme’)

SEBI vide circular Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017 (‘March 10, 2017 Circular’) had laid down the requirements to be complied with by a listed entity for filing of Scheme together with conditions for listing of equity shares or warrants issued pursuant to the Scheme. However, the aforesaid circular did not cover listing of NCRPS and NCDs issued under the Scheme.

Vide a circular dated May 26, 2017 (‘New Circular’), SEBI has issued a framework for listing of NCRPS or NCDs issued in lieu of listed Specified Securities (as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009) vide a Scheme. It is to be noted that if, as per Scheme, same series/class of NCRPS/NCDs are also allotted to investors other than to the holders of listed Specified Securities, then such NCRPS/NCD shall not be eligible for seeking listing.

As per the New Circular, NCRPS / NCD to be issued pursuant to a Scheme should comply with following key conditions (in addition to conditions specified for issue of March 10, 2017 Circular):



Eligible listed entity

Listed entity which is part of the Scheme and NCRPS/NCD are proposed to be issued to the holders of listed Specified Securities of such listed entity

Tenure/Maturity of NCRPS / NCD

Atleast one year

Credit Rating for NCRPS / NCD


Minimum Credit Rating, if any, as specified for public issue of NCRPS under SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (‘NCRPS Regulations’) or for NCD under SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (‘ILDS Regulations’), by a registered Credit Rating Agency.

Valuation Report

Valuation Report to be submitted alongwith draft Scheme as per March 10, 2017 Circular should include valuation of underlying NCRPS/NCDs to be issued pursuant to Scheme

Additional Disclosure in Scheme

In relation to NCRPS / NCD, the Scheme should disclose:

  • Face Value and Price
  • Terms of Dividend/Coupon including frequency, etc
  • Credit Rating
  • Tenure/Maturity
  • Terms of Redemption
  • Other embedded features (put/call option, dates, etc)
  • Term Sheet
  • Any other information/details pertinent to investors

Other Conditions

  • Mandatory compliance with all applicable provisions of Companies Act, 2013 (‘Companies Act’)
  • Issue shall be in demat form only
  • For NCDs -Appointment of Debenture Trustee, creation of an appropriate charge or security, in compliance with ILDS Regulations and Companies Act
  • Compliance with all the provisions of NCRPS Regulations and ILDR Regulations except for provisions related to Public issue, Private placement, filing of offer document, etc.



The format of Compliance Report has also been amended to include certification by Company Secretary and Managing Director with regard to compliance with the abovementioned additional conditions.

BDO comment

The New Circular brings specific regime and requirement with respect to listing of NCRPS / NCD that are issued as a part of the Scheme (such as merger / demerger). It is vital to note that the New Circular restricts listing of NCRPS/NCDs which are proposed to be allotted to investors other than to the holders of listed Specified Securities. This may restrict issuance of such instruments to the holders of unlisted entity which is part of the Scheme.