As per press release by SEBI, Board approved the proposal to rationalize the existing framework pertaining to reclassification of promoter/ promoter group entities. The proposal includes exemption from existing requirements, in cases of reclassification pursuant to an order of the regulator under any law in line with existing exemption already available to cases of resolution plan approved under section 31 of the Insolvency code. The requirement of seeking approval of shareholders in cases where the promoter seeking reclassification holds shareholding of less than 1%, subject to the promoter not being in control. Few procedural requirements related to reclassification such as obtaining request from promoter, approval from the board and shareholders in case of open offer under SEBI Takeover Regulations and scheme of arrangement.This exemption shall be subject to the outgoing promoter’s intent of reclassification being disclosed in the letter of offer or scheme of arrangement alongwith fulfilling other requirements such as not being in control, not represented on the Board, etc.
Further, It has also been decided to reduce the time gap between the date of board meeting and shareholders meeting for consideration of reclassification request, to a minimum of one month and a maximum of three months from the existing requirement of minimum period of three months and maximum six months.