Wholly Owned Subsidiaries: Broadened Ambit Under The LODR Regulations

The Securities and Exchange Board of India ("SEBI"), in its recent informal guidance to Renaissance Jewellery Limited ("Renaissance Informal Guidance"), has introduced a rather novel but somewhat contentious interpretation of Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations"). In a nutshell, the informal guidance is in relation to an exemption from the requirement of obtaining an 'observation letter' or a 'no-objection letter' from the relevant stock exchanges on the draft scheme of arrangement, involving merger of an 'indirect' wholly owned subsidiary with its listed parent company.

While Regulation 37 of the LODR Regulations requires a listed entity desirous of undertaking a scheme of arrangement or involved in a scheme of arrangement to file the draft scheme of arrangement with the relevant stock exchange(s) for obtaining an 'observation letter' or a 'no-objection letter', before filing such scheme