Sebi eases norms for lenders buying stake in distressed firms
THE RELAXATION WOULD BE SUBJECT TO CERTAIN CONDITIONS, INCLUDING SHAREHOLDERS’ APPROVAL OF THE STAKE ACQUISITION BY WAY OF SPECIAL RESOLUTION
The Securities and Exchange Board of India (Sebi) on Wednesday relaxed norms for stake purchase in distressed listed companies by lenders, exempting them from making open offers for shareholders.
The relaxation would be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution.
The Sebi decision comes against the backdrop of the government and Reserve Bank of India stepping up efforts to tackle the menace of bad loans, amounting to ₹6 lakh crore.
At the board meeting here, Sebi decided to ease the norms for restructuring in stressed companies that are listed on exchanges as well as for resolution plans approved under the Insolvency and Bankruptcy Code.
Clearing the proposals, the Securities and Exchange Board of India (Sebi) said they are aimed at facilitating “turnaround of listed companies in distress which will benefit their shareholders and lenders”.
Currently, relaxations from preferential issue requirements and from open offer obligations are available for lenders undertaking restructuring of distressed listed companies under Strategic Debt Restructuring (SDR) scheme. There have been representations made to Sebi that lenders who have acquired shares and propose to divest them to new investors faced difficulties as the latter have to make an open offers. Such offers further reduce the funds available for investment in the company concerned.
In view of the concerns raised, Sebi has decided to extend the relaxations to the new investors acquiring shares in distressed companies pursuant to such restructuring schemes. “Such relaxations shall be subject to certain conditions like approval by the shareholders of the companies by special resolution and lock-in of their shareholding for a minimum period of three years,” the regulator said in a release.
Further, the relaxations would be applicable for the lenders under other restructuring schemes undertaken in accordance with the RBI guidelines.
Sebi board has also cleared the proposal to provide exemption from open offer obligations “for acquisitions pursuant to resolution plans approved by NCLT under the Insolvency and Bankruptcy Code, 2016”.