HUL Secures BSE and NSE Clearance for Demerger with Kwality Wall’s

In a significant corporate development, Hindustan Unilever Limited (HUL) has moved forward in its strategic restructuring by proposing a demerger of its ice cream business into a separate entity: Kwality Wall’s (India) Limited (KWIL).

This decision, approved by HUL’s Board on 22nd January 2025, aims to enhance business focus and operational agility. The scheme of arrangement is structured under Sections 230 to 232 of the Companies Act, 2013, and is now progressing through the regulatory approval phase.

Stock Exchanges Grant Observational Clearance

On 14th May 2025, HUL received a formal communication from both BSE Limited and the National Stock Exchange of India Limited (NSE) regarding the demerger proposal. BSE issued an observation letter indicating “no adverse observations,” and NSE followed with a letter stating “no objection.” 

These remarks were given following SEBI’s comments issued on 13th May 2025, which included detailed procedural, financial, and disclosure requirements. Notably, both exchanges clarified that their clearance does not imply endorsement of the scheme’s financial or operational merits.

The scheme will now be presented before the National Company Law Tribunal (NCLT) within 6 months of receiving these letters. HUL has already made the letters available on its investor relations website for transparency and compliance.

Compliance, Disclosures and SEBI-Mandated Conditions

As per the requirements laid out in SEBI’s master circular dated 20th June 2023 and other relevant regulatory provisions, the demerger must adhere to several conditions. HUL is required to disclose all enforcement actions, ongoing litigations, and liabilities related to the ice cream business before NCLT and the shareholders. 

The scheme must also include disclosures such as the need for the demerger, expected synergies, financial implications, share swap ratios, capital structures, and a comparison of pre- and post-demerger metrics for both HUL and KWIL.

Additional instructions include the publication of an information memorandum and newspaper advertisements about KWIL, ensuring transparency for public shareholders. Furthermore, all shares issued under the scheme must be in dematerialised form and remain frozen until officially listed. HUL is also obligated to file a compliance report demonstrating adherence to each point outlined in the observation letters.

Read More: ITC vs HUL: A Deep Dive into Dividend Yields History of 2 FMCG Majors.

HUL Share Performance 

As of May 15, 2025, at 1:50 PM, HUL share price is trading at ₹2,367.20 per share, a surge of 0.71% from the previous closing price. Over the past month, the stock has surged by 0.24%

Conclusion

The observation letters from BSE and NSE mark a crucial advancement in HUL’s demerger journey. While these observations facilitate the next step of filing before NCLT, the successful implementation of the scheme depends on comprehensive compliance with regulatory requirements and final judicial approval.

 

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