Market regulator Securities and Exchange Board of India (Sebi) on Friday tightened the rules for firms who have listed their debt instruments and are involved in a “scheme of arrangement” such as a merger, amalgamation or demerger among others.

The operational guidelines which were released by the market regulator would mean that if there is an amalgamation, merger, or demerger with regard to these firms, they should file the draft scheme with stock exchanges for obtaining a no-objection letter before it is filed with any court or tribunal.

Further, Regulation 94 of the Listing Regulations requires the designated stock exchange to forward such draft schemes to Sebi in the manner prescribed by the market regulator.

Earlier, this rule was applicable only to entities that have listed their equity shares and convertible securities.

The latest rules follow a discussion paper floated by the market regulator in May this year.

Sebi has said that in case of entities that are debt listed and have raised money by way of a public issue or private placement of non-convertible debt securities (NCDs) or non-convertible redeemable preference shares (NCRPS), they are required to comply with certain requirements before the scheme of arrangement is filed with the National Company Law Tribunal (NCLT).

These entities would have to choose one of the stock exchanges as the designated bourse for the purpose of co-ordinating with Sebi.

Sebi order

■ Rules meant for firms who have listed their debt and who are in the process of undergoing mergers, demerger or other schemes of arrangement

■ Draft scheme must be filed with the stock exchanges first before any other court or tribunal