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Future Group and Reliance Retail Deal Receives Approval from SEBI with Observations

The Securities and Exchange Board of India (SEBI) on Wednesday granted approval to the deal between Kishore Biyani-led Future Group and Reliance Retail, an arm of the Mukesh Ambani-led Reliance Industries Limited. The market regulator, in its letter which approved the deal, listed a number of conditions in accordance with the Composite Scheme of Arrangement.

“The Company shall ensure that the lock-in for the remaining time after the scheme is subject to the shares of the exchanged entity, provided instead of the locked-in shares of the transferring entities”, the regulatory body stated.

"Company shall ensure that proceedings pending before SEBI against the entities part of the promoter/promoter group or are directors of the companies involved in the scheme, should be highlighted in the scheme document filed before National Company Law Tribunal (NCLT)," it further added in the letter.

The letter further stated, "Company shall ensure that the details of the complaints made by Amazon.com NV Investment Holdings LLC (Amazon), the submissions of Future Retail Limited and the counter submissions of Amazon and all the proceedings pending and completed related to the same in the Delhi High Court Order in CS(COMM) 493/2020, the Award of Emergency Arbitrator in the Singapore International Arbitrator Centre or any other ongoing court/ arbitration proceedings, or any orders issued therein are bought to the notice of the Shareholders of the listed entities involved in the scheme while taking shareholder approval on the scheme."

"Further the same shall also be brought to the notice of NCLT while filing the draft scheme for their approval,” it added.

 Additionally, “Company shall ensure that any future disputes, complaints, regulatory actions or proceedings, or orders issued therein involving the draft scheme if any, shall be brought to the notice of shareholders prior to the approval by NCLT.”

The regulator in the letter also stated that the Company shall ensure that as a part of the notice to a shareholder seeking their approval on the scheme. The validity of the Observation Letter shall be six months from the date of the Letter, within which the scheme shall be submitted to the NCLT. Observation by SEBI/stock exchanges must be mentioned in the NCLT petition.

As per the letter, 74.2% of the Business Value of the Future Enterprises Limited post amalgamation of all the Transferor companies is getting transferred to Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited and these two companies would not be seeking listing post the scheme of arrangement.

The approval comes a few days after Amazon asked SEBI to suspend its review of the Rs 24,713 crore deal and not grant a no-objection certification on the ground that its challenge to the agreement was before the Delhi High Court. E-commerce major Amazon wrote to SEBI, apprising it about the admission of its appeal before the division of the Delhi High Court and urged the market regulator to suspend the review of the Future-Reliance Industries Ltd (RIL) deal. The Securities and Exchange Board of India (SEBI) on Wednesday granted approval to the deal between Kishore Biyani-led Future Group and Reliance Retail, an arm of the Mukesh Ambani-led Reliance Industries Limited. The market regulator, in its letter which approved the deal, listed a number of conditions in accordance with the Composite Scheme of Arrangement.

“The Company shall ensure that the lock-in for the remaining time after the scheme is subject to the shares of the exchanged entity, provided instead of the locked-in shares of the transferring entities”, the regulatory body stated.

"Company shall ensure that proceedings pending before SEBI against the entities part of the promoter/promoter group or are directors of the companies involved in the scheme, should be highlighted in the scheme document filed before National Company Law Tribunal (NCLT)," it further added in the letter.

The letter further stated, "Company shall ensure that the details of the complaints made by Amazon.com NV Investment Holdings LLC (Amazon), the submissions of Future Retail Limited and the counter submissions of Amazon and all the proceedings pending and completed related to the same in the Delhi High Court Order in CS(COMM) 493/2020, the Award of Emergency Arbitrator in the Singapore International Arbitrator Centre or any other ongoing court/ arbitration proceedings, or any orders issued therein are bought to the notice of the Shareholders of the listed entities involved in the scheme while taking shareholder approval on the scheme."

"Further the same shall also be brought to the notice of NCLT while filing the draft scheme for their approval,” it added

 Additionally, “Company shall ensure that any future disputes, complaints, regulatory actions or proceedings, or orders issued therein involving the draft scheme if any, shall be brought to the notice of shareholders prior to the approval by NCLT.”

The regulator in the letter also stated that the Company shall ensure that as a part of the notice to a shareholder seeking their approval on the scheme. The validity of the Observation Letter shall be six months from the date of the Letter, within which the scheme shall be submitted to the NCLT. Observation by SEBI/stock exchanges must be mentioned in the NCLT petition.

As per the letter, 74.2% of the Business Value of the Future Enterprises Limited post amalgamation of all the Transferor companies is getting transferred to Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited and these two companies would not be seeking listing post the scheme of arrangement.

The approval comes a few days after Amazon asked SEBI to suspend its review of the Rs 24,713 crore deal and not grant a no-objection certification on the ground that its challenge to the agreement was before the Delhi High Court. E-commerce major Amazon wrote to SEBI, apprising it about the admission of its appeal before the division of the Delhi High Court and urged the market regulator to suspend the review of the Future-Reliance Industries Ltd (RIL) deal.

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