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BSE, NSE issue guidelines for companies undergoing insolvency proceedings
PrintIn a bid to address information asymmetry among investors, stock exchanges, BSE and NSE, on Friday came out with a framework for dealing with companies undergoing corporate insolvency resolution process.
In the recent past, the exchanges have come across instances where the approved resolution plan provides for delisting of the company or write off/cancellation/extinguishment of existing equity shares without any payout or consideration to the existing shareholders.
However, it is observed that there is a considerable time lag between the pronouncement of verbal order by NCLT and the final written order by NCLT, the exchanges said in separate statements.
"Companies generally hold on to the information and do not make any/ timely disclosure to the stock exchanges until receipt of a written copy of the order. By this time, the information may be available to a select group of people and may create information asymmetry and confusion in the market," the exchanges said.
Under the framework, the exchanges will issue a detailed guidance note to companies undergoing Corporate Insolvency Resolution Process (CIRP) and the Resolution Professional (RP) on compliance and disclosure requirements as per Sebi's (Listing Obligations and Disclosure Requirements) LODR Regulations.
The guidance note will be uploaded on the exchanges' websites, an email will be sent to all the companies which are under CIRP informing them about the guidance note.
The guidance note provides that the Resolution Professional has to comply with LODR rules and in compliance, will disclose the fact of approval of resolution plan on oral pronouncement or otherwise of the order on immediate basis and not later than 30 minutes.
Additionally, the RP will have to inform through the exchange platform any impact on the investors of listed securities, on areas such as status of listing, the value of holding of existing holders, write off/ cancellation/ extinguishment of existing equity shares or preference shares or debentures without any payment to such holders
In the recent past, the exchanges have come across instances where the approved resolution plan provides for delisting of the company or write off/cancellation/extinguishment of existing equity shares without any payout or consideration to the existing shareholders.
However, it is observed that there is a considerable time lag between the pronouncement of verbal order by NCLT and the final written order by NCLT, the exchanges said in separate statements.
"Companies generally hold on to the information and do not make any/ timely disclosure to the stock exchanges until receipt of a written copy of the order. By this time, the information may be available to a select group of people and may create information asymmetry and confusion in the market," the exchanges said.
Under the framework, the exchanges will issue a detailed guidance note to companies undergoing Corporate Insolvency Resolution Process (CIRP) and the Resolution Professional (RP) on compliance and disclosure requirements as per Sebi's (Listing Obligations and Disclosure Requirements) LODR Regulations.
The guidance note will be uploaded on the exchanges' websites, an email will be sent to all the companies which are under CIRP informing them about the guidance note.
The guidance note provides that the Resolution Professional has to comply with LODR rules and in compliance, will disclose the fact of approval of resolution plan on oral pronouncement or otherwise of the order on immediate basis and not later than 30 minutes.
Additionally, the RP will have to inform through the exchange platform any impact on the investors of listed securities, on areas such as status of listing, the value of holding of existing holders, write off/ cancellation/ extinguishment of existing equity shares or preference shares or debentures without any payment to such holders
Category : Insolvent Professional | Comments : 0 | Hits : 486
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