Bankruptcy code: SEBI working on norms to ensure firms comply with listing terms

Co-opts staff from insolvency Board, bourses

New Delhi, December 3:  

SEBI is working on compliance norms that companies going through the insolvency process must stick to so as to ensure that interests of the stakeholders are not compromised.

The market regulator is working with a set of officials from the Insolvency and Bankruptcy Board of India and stock exchanges to come up with rules that will ensure the companies meet their listing obligations.

“The thinking is not really to dilute any obligations for such companies or compromise the interest of any stakeholder, but facilitate compliances to meet their listing obligations,” MS Sahoo, Chairman, Insolvency and Bankruptcy Board of India (IBBI), told BusinessLine.

Investors should know that there cannot be exemptions for making disclosures in respect of listed companies going through a resolution process. “Listed companies have to make disclosures as and when the National Company Law Tribunal admits it…. All the disclosures have to be made. The only thing is who will do it when the powers of the board remain suspended. The insolvency resolution professional (IRP) has to do the disclosure,” Sahoo said.

Under a resolution process, once the powers of boards are suspended, the obligation gets cast on the IRP.

Two proposals

“That kind of dilution will be made and that kind of facilitation will be made,” he added.

Sahoo highlighted that two things have already been decided for listed corporates under the resolution process and accepted by SEBI.

“If a resolution plan leads to substantial acquisition of shares or a takeover then that would not require a public offer under the takeover code. That has been done by amending the takeover regulations.

“Second, if the resolution plan requires preferential allotment of shares, the pricing norms given in the existing regulations will not apply. SEBI has given its nod for this too,” Sahoo added.

He said that the group working on the norms is expected to lay down also the procedure for insolvency professionals in making disclosures for companies going through the resolution process.

Similarly, IBBI is in talks with Corporate Affairs Ministry to see if resolution professionals can be allowed to sign the annual financial statements and returns to be filed with the Ministry in respect of companies going through the resolution process.

“It is these kinds of facilitation that we are doing,” Sahoo said.

(This article was published on December 3, 2017)

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