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The ban on Kishore Biyani and others from dealing in the securities market or shares of Future Retail Ltd may not affect Future Group’s ongoing sale of retail assets to Reliance Industries Ltd, legal experts said.

In its order, the Securities and Exchange Board of India (Sebi) said, “Debarment/restraint/freeze imposed under this order shall not apply to those existing holding of securities of such debarred entities, in respect of which any scheme of arrangement under Section 230-232 of the Companies Act, 2013, is approved by NCLT, requiring extinguishment of such securities and/or receipt of other securities in lieu of such securities."

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Sections 230-232 of Companies Act deal with amalgamation or merger of firms, arrangements between a company and its lenders or members, and powers of the National Company Law Tribunal (NCLT) to enforce such amalgamations and arrangements. The 24,713 crore deal is currently pending before the Mumbai bench of NCLT, following approvals from the Competition Commission of India and Sebi.

“The deal involves an amalgamation of Future group entities, including Future Retail, into Future Enterprises and then only the assets of the amalgamated company will be sold on a slump sale basis to Reliance, not the shares of this entity (Future Retail). So, this would not amount to trading or dealing in shares of Future Retail," said Sajid Mohamed, managing partner of Agrud Partners, a Mumbai-based law firm. Another senior lawyer, speaking on condition of anonymity, said that the order won’t impact the NCLT process.

To be sure, the final impact of the order could eventually depend on how the courts interpret it.

The Sebi order in connection with a bar on dealing in securities has taken care to exclude dealings in securities under any impending scheme of arrangement. Therefore, it would not pose a hurdle to the arrangement with Reliance, Future Corporate Resources said.

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