Reg 37A sale or disposal of an undertaking outside a scheme
The special resolution and disclosure conditions for selling, leasing or otherwise disposing of the whole or substantially the whole of an undertaking without a scheme of arrangement.
Standing duty, no filing date
- SEBI
- SEBI events and governance
- Not specified
- 2026-09-01
There is no filing deadline here. Reg 37A is a condition on the transaction: a sale, lease or other disposal of the whole or substantially the whole of an undertaking outside a scheme of arrangement needs a special resolution, and the votes cast by public shareholders in favour must exceed the votes cast against. The explanatory statement has to carry the object, the rationale and the intended use of the proceeds.
Deadlines counted from an event
A sale, lease or other disposal of the whole or substantially the whole of an undertaking, otherwise than through a scheme of arrangement, requires a special resolution, and the votes cast by public shareholders in favour must exceed the votes cast against by public shareholders. The explanatory statement accompanying the notice must disclose the object of the transaction, the rationale, and the proposed use of the proceeds. Unchanged since 15 June 2023.
The rule
A sale, lease or other disposal of the whole or substantially the whole of an undertaking, otherwise than through a scheme of arrangement, requires a special resolution, and the votes cast by public shareholders in favour must exceed the votes cast against by public shareholders. The explanatory statement accompanying the notice must disclose the object of the transaction, the rationale, and the proposed use of the proceeds. Unchanged since 15 June 2023.
Who must comply
- Every entity with specified securities listed on a recognised stock exchange
- A sale, lease or other disposal of the whole or substantially the whole of an undertaking outside a scheme of arrangement
- Reg 37A carries a carve-out for a wholly owned subsidiary, subject to two provisos in the regulation.
Statutory basis
Before you file
- Get the board to approve the transaction and the explanatory statement.
- Prepare the object, rationale and proposed use of proceeds for the explanatory statement.
- Check whether the wholly owned subsidiary carve-out applies.
- Set up e-voting so the public-shareholder votes can be counted separately.
How to file
- Include the special resolution in the general meeting notice.
- Include the object, rationale and use of proceeds in the explanatory statement.
- Hold the vote and count the public-shareholder votes separately.
- Confirm the votes cast in favour by public shareholders exceed the votes cast against.
- Submit the voting results to the exchanges under Reg 44(3).
General meeting of shareholders, with results filed to the exchanges
If you miss it
No per-day exchange fine is asserted here, because this provision is not on the fine table we have verified. A breach of a corporate-governance condition is a breach of listing conditions, which section 23E of the Securities Contracts (Regulation) Act reaches at not less than ₹5 lakh and up to ₹25 crore. SEBI's other head is section 15HB of the SEBI Act, the residual penalty that applies where the Act provides no specific penalty for the contravention. Section 15A(b) is not the right head, because a missed meeting is not a failure to furnish information.
- The default shows in the quarterly governance report inside Integrated Filing (Governance), so it becomes visible to the exchange and to investors without any separate complaint
- SEBI has moved to a settlement route for many governance defaults, which still carries a settlement amount and an admission on the record
- A disposal completed without the special resolution and the public-shareholder majority is a transaction carried out in breach of a listing condition, which is far harder to unwind than a late filing
Recent changes affecting this
Relaxation from SEBI Master Circular for Minimum Public Shareholding Non-Compliance
Master Circular for compliance with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 by listed entities
Master Circular for listing obligations and disclosure requirements for Non-convertible Securities, Securitized Debt Instruments and/ or Commercial Paper
Common questions
What is the majority-of-majority test?
Alongside the special resolution, the votes cast in favour by public shareholders have to exceed the votes cast against by public shareholders. Promoter votes cannot carry the resolution on their own.
Does Reg 37A apply to a scheme of arrangement?
No. It applies to a disposal outside a scheme. A disposal through a scheme goes down the Reg 37 no-objection route instead.