In a significant development for Balaji Telefilms Limited, the company has successfully received the Observation Letter from the National Stock Exchange of India Limited (NSE) for its proposed Composite Scheme of Arrangement with Alt Digital Media Entertainment Limited (ADMEL) and Marinating Films Private Limited (MFPL). This marks a crucial step in the process of seeking approval for the scheme under Sections 230 to 232 of the Companies Act, 2013.

What Is the Composite Scheme of Arrangement?

The Composite Scheme of Arrangement aims to amalgamate and transfer assets between three entities: Alt Digital Media Entertainment Limited (First Transferor Company), Marinating Films Private Limited (Second Transferor Company), and Balaji Telefilms Limited (Transferee Company). The proposed scheme would impact their respective shareholders, streamlining the business and setting the stage for an integrated future.

The Observation Letter was issued by the NSE on January 03, 2025, confirming that the scheme can now be submitted to the National Company Law Tribunal (NCLT) for final approval. The approval from NSE follows the receipt of a similar letter from the Bombay Stock Exchange (BSE), enabling the company to take the next steps toward regulatory clearance.

Key Details in the NSE’s Observation Letter

The NSE’s letter contained several important guidelines and recommendations that the company must adhere to while moving forward. These include:

• Compliance with SEBI Regulations: The company has been instructed to ensure the proposed scheme complies with Regulation 11 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR). This ensures the scheme's transparency and fairness to shareholders.

• Ongoing Proceedings Disclosure: It was noted that Balaji Telefilms must disclose all details regarding ongoing adjudication, recovery proceedings, and enforcement actions against the company, its promoters, and directors. This disclosure must be made when seeking approval of the scheme from NCLT.

• Additional Information for Shareholders: The NSE further outlined that additional information, including financial details, must be provided to shareholders before their approval. This information includes the net worth, assets, and liabilities of all entities involved in the scheme.

• Impact on Shareholders: The NSE instructed that the company must prominently disclose the synergies of the business, the cost-benefit analysis of the scheme, and its impact on shareholders, both pre and post-merger.

Transparency and Shareholder Confidence

In line with SEBI regulations, Balaji Telefilms is required to submit detailed information about the financial implications of the merger, including potential impacts on shareholders, promoters, and minority stakeholders. This includes the adjustment of retained earnings, amalgamation deficits, and future growth prospects due to the merger. The company has committed to providing this information in a clear and accessible manner to enable informed decision-making by its shareholders.

Furthermore, the company will ensure that any new equity shares issued as part of the scheme will be dematerialized and available to shareholders in demat form only. This move aims to enhance transparency and ease of trading for shareholders.

Next Steps: Filing with NCLT

Following the receipt of the no-objection letter from NSE, Balaji Telefilms is now positioned to file the scheme with the National Company Law Tribunal (NCLT) for final approval. This marks the next step in the legal process of the scheme’s implementation. The company is required to ensure that all the provisions laid out by the SEBI and the stock exchanges are incorporated in the final scheme document before submission to NCLT.

Additional Insights

This development is pivotal for Balaji Telefilms Limited, as it could lead to synergies between the involved companies, expanding its reach and operational scope. The company has also been proactive in ensuring compliance with SEBI guidelines, disclosure requirements, and transparency norms, reinforcing its commitment to maintaining corporate governance standards.

For investors and stakeholders monitoring the progress of this scheme, it is important to stay informed about further filings and updates regarding the NCLT proceedings. For more details, the Observation Letter can be accessed on Balaji Telefilms' official website at this link.

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