SEBI PROVIDES RELAXATIONS FOR INSOLVENT FIRMS
Sebi has relaxed requirements to comply with delisting norms for firms facing insolvency proceedings,
provided the resolution plan lays down the procedure for delisting that particular entity from the exchanges. The move is expected to provide succour for various listed firms that have been referred for resolution under the IBC. More than 750 entities, including many listed firms, are facing insolvency proceedings. In a notification, the market regulator said norms pertaining to delisting of equity shares would not be applicable to any entity that is getting delisted pursuant to a resolution plan approved under the IBC.
Markets regulator Securities and Exchange Board of India (Sebi) has relaxed requirements to comply with delisting norms for companies facing insolvency proceedings, provided the resolution plan lays down the procedure for delisting that particular entity from the exchanges.
The move is expected to provide succour for various listed companies that have been referred for resolution under the Insolvency and Bankruptcy Code (IBC).
More than 750 entities, including many listed firms, are facing insolvency proceedings.
In a notification, Sebi said norms pertaining to delisting of equity shares would not be applicable to any entity that is getting delisted pursuant to a resolution plan approved under the IBC.
The exemption would be subject to conditions that the resolution plan “lays down any specific procedure to complete the delisting of such shares” or that the plans provides an exit option to the existing public shareholders at a specified price.
According to Sebi, the exit for the shareholders should be at a price that is not less than the liquidation value determined after paying off dues.
In case the existing promoters or any other shareholders are to be provided an opportunity to exit under the resolution plan at a price higher than the price determined, then at least the same price should be offered for the existing public shareholders of that particular entity, according to the notification.