Ministry of Corporate Affairs (MCA) has recently notified certain classes of companies which shall not be considered as ‘listed companies’ under the Companies Act, 2013 (Companies Act), by inserting a new Rule 2A in Companies (Specification of definitions details) Rules, 2014, w.e.f. April 1, 2021. As per the notification, following companies would not be considered as listed companies:
- Public companies which have not listed their equity shares on a recognized stock exchange but have listed their:
- non-convertible debt securities issued on private placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations), or
- non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013;
- both category of a) and b) above.
- Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of ILDS Regulations, and
- Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a foreign jurisdiction
Copy of the notification can be accessed from here.
Prior to this notification, a company with any of its securities listed on a stock exchange was considered as listed company and was required to comply with SEBI, in addition to compliances under the Companies Act. However, now such companies would not be treated on the same footing as other equity listed companies for the purpose of undertaking compliances under the Companies Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, which are otherwise applicable for all listed entities.
This change will also enable unlisted private companies to issue non-convertible debt and get these securities listed without facing larger compliance requirements which are applicable to listed companies. This will help in deepening the corporate debt market.
Copy of the notification is attached for your reference.
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