INTERSECTION OF IBC & SEBI – AMENDMENTS TO LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS REGULATIONS CONSEQUENT TO CIRP – Eshwars
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INTERSECTION OF IBC & SEBI – AMENDMENTS TO LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS REGULATIONS CONSEQUENT TO CIRP

Authored by Padma Akila

In our earlier article, we had written about the Consultation Paper of SEBI proposing disclosure requirements about the approved resolution plans in respect of listed companies that are admitted for corporate insolvency resolution process under the Insolvency & Bankruptcy Code, 2016 and also proposing certain minimum public shareholding in such companies.

Changes related to approved Resolution Plan

SEBI on 8th January 2021 has brought in amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [“LODR”], bringing in disclosure requirements which are as under:

Companies that have a resolution plan approved by NCLT would have to disclose the same as a material event under Regulation 30 of LODR. The disclosure would have to be made within 24 hours of its approval as per Regulation 30(6), and in case of delay the same would have to be explained while making the disclosure.

The information to be disclosed as a material event to the stock exchanges is the specific features and details of the resolution plan as approved by NCLT, not involving commercial secrets, including details such as:

(i) Pre and Post net-worth of the company;

(ii) Details of assets of the company post CIRP;

(iii) Details of securities continuing to be imposed on the companies’ assets;

(iv) Other material liabilities imposed on the company;

(v) Detailed pre and post shareholding pattern assuming 100% conversion of convertible securities;

(vi) Details of funds infused in the company, creditors paid-off;

(vii) Additional liability on the incoming investors due to the transaction, source of such funding etc.;

(viii) Impact on the investor revised P/E, RONW ratios etc.;

(ix) Names of the new promoters, key managerial persons(s), if any and their past experience in the business or employment. In cases where promoters are companies, history of such companies and names of natural persons in control;

(x) Brief description of business strategy.

Disclosure related to Minimum Public Shareholding

While in the Consultation Paper, there were certain proposals on Minimum Public Shareholding in companies that have a new promoter coming in consequent to the resolution plan, SEBI by the amendments made on 8th January 2021 has limited it to requiring those companies to make disclosure as a material event, the following:

(i) Proposed steps to be taken by the incoming investor/acquirer for achieving the MPS;

(ii) Quarterly disclosure of the status of achieving the MPS; and

(iii) The details as to the delisting plans, if any approved in the resolution plan.

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