**Title:** NSE and BSE Introduce Swift Processing for Mergers and Demergers
**Meta Description:** NSE and BSE’s new SOP streamlines merger and demerger applications to seven days, but challenges remain with NCLT approvals and regulatory scrutiny.
**URL Slug:** nse-bse-merger-demerger-processing
**Headline:** NSE and BSE Launch New SOP for Faster Merger and Demerger Processing
The National Stock Exchange of India Ltd and BSE Ltd have implemented a new Standard Operating Procedure (SOP) effective August 1, aimed at expediting the processing of merger and demerger applications. This new framework promises a processing window of just seven working days, provided that all necessary documents are submitted correctly. Previously, the processing time for such applications could take anywhere from three to five months.
Mandated by the Securities and Exchange Board of India (SEBI), the updated SOP eliminates the need for physical paperwork, allowing companies to file applications digitally through platforms like NSE’s Electronic Application Processing System and BSE’s Listing Centre. However, companies listed on these exchanges must still seek approval from the National Company Law Tribunal (NCLT) for mergers and demergers, a process that remains lengthy and complex.
Market participants and legal experts have noted that while the new framework aims to streamline procedures, it may introduce new risks due to its rigid structure. Madhavan Srivatsan, a senior partner at Emerald Law Offices, highlighted that the SOP, while time-bound, could lead to challenges stemming from undefined obligations of SEBI and a lack of safeguards against unexpected procedural issues.
Key Takeaways:
The new SOP from NSE and BSE establishes a seven-day review period for complete merger and demerger applications, replacing the previous lengthy processes. However, the requirement for NCLT clearances, along with undefined timelines from SEBI and strict response protocols, could still prolong the closure of deals. While the predictability of the new framework is welcomed by investors and legal professionals, concerns persist regarding its inflexibility and the pressure of tight deadlines for company responses.
Under the new SOP, companies are required to submit their draft scheme for a merger or demerger within 15 days of receiving board approval. They will have only two opportunities to respond to queries from the exchanges. If the exchanges are satisfied with the draft, they will issue a no-objection certificate or observation letter to SEBI, which will then provide its clearance. Only after receiving this clearance can a company approach the NCLT for final approval.
Ketan Dalal, managing director at compliance and advisory firm Katalyst Advisors, described the initial step of obtaining exchange and SEBI approvals as “long and tortuous.” He noted that this process currently takes 3-5 months, and without this approval, companies cannot proceed to the NCLT. Dalal advocates for a structural change that would allow parallel NCLT filings, enabling companies to commit to incorporating SEBI-driven amendments in their draft schemes or withdraw if their plans are rejected. He believes this approach could save 4-5 months, aligning timelines with commercial realities.
**FAQ Section:**
**Q: What is the new processing time for merger and demerger applications under the NSE and BSE SOP?**
A: The new SOP establishes a processing window of seven working days for merger and demerger applications, provided all documents are in order.
