ABC Textiles Ltd., a listed company, is in the process of merger with XYZ Yarn Ltd., not being a listed company. As the Company Secretary of ABC Textiles Ltd., advise on importance and process of obtaining Observation Le

Regulation 37 of the SEBI of the (Listing Obligations and Disclosure Requirements) Regulations provides that the listed entity desirous of undertaking a scheme of arrangement or involved in a scheme of arrangement, shall file the draft scheme of arrangement, proposed to be filed before Tribunal under Sections 230-234 and an scheme of arrangement by way of reduction of capital under Section 66 of the Companies Act, 2013, along with a non-refundable fee as specified in Schedule XI, with the stock exchange(s) for obtaining Observation Letter or No-objection letter, before filing such scheme with any Court or Tribunal, in terms of requirements specified by the Board or stock exchange(s) from time to time. The listed entity shall not file any scheme of arrangement under sections 230-234 and scheme of arrangement by way of reduction of capital under Section 66 of the Companies Act, 2013, with Tribunal unless it has obtained observation letter or No-objection letter from the stock exchange(s). The listed entity shall place the Observation letter or No-objection letter of the stock exchange(s) before the Tribunal at the time of seeking approval of the scheme of arrangement. The validity of the 'Observation Letter' or No-objection letter of stock exchanges shall be six months from the date of issuance, within which the draft scheme of arrangement shall be submitted to the Court or Tribunal. The listed entity shall ensure compliance with the other requirements as may be prescribed by the Board from time to time.