Exchanges seek prompt information on companies facing IBC – Times of India
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MUMBAI: Aimed at enhancing information flow about listed companies undergoing corporate resolution under the Insolvency & Bankruptcy Code (IBC), the bourses on Friday said that all resolution professionals (RPs) must follow Sebi’s disclosure norms applicable to all listed entities.
Currently, although RPs (the court-appointed persons who carry out the resolution process) are required to disclose to the exchanges details about companies under IBC, there have been instances of non-compliance, an NSE release said.
Under the new norms, an RP is also required to disclose to the shareholders of the company about the impact of all insolvency court decisions through the bourses. Sebi had amended its Listing Obligation & Disclosure Requirement (LODR) guidelines for disclosures by RPs, which were effective from January 8, 2021.
On their part, bourses and brokers will also highlight the stocks of all those companies that are under the IBC process, the NSE release said. In case the insolvency court orders delisting of a company, the exchanges will suspend trading in the stock of that company, the release said. The exchanges will also issue detailed guidelines for disclosures by RPs.
The release also noted that the exchange shall identify the security in a way that will be easy for investors to know that it is currently under the resolution process. “The exchange will continue to provide an alert at the time of order entry informing the market participants that the scrip is undergoing (resolution under IBC).”
Such alerts will be available from the day of admission into resolution process till the day of its suspension or exit from the resolution process, investors will have precise information about the status of that company, the NSE said. If a resolution plan allows the value of the listed stock to be reset at zero and the company is ordered to be delisted, or “where the entire equity capital is reduced/cancelled/extinguished without any payment to the existing shareholders, exchanges in coordination with each other”, trading in the stock should be suspended.
Currently, although RPs (the court-appointed persons who carry out the resolution process) are required to disclose to the exchanges details about companies under IBC, there have been instances of non-compliance, an NSE release said.
Under the new norms, an RP is also required to disclose to the shareholders of the company about the impact of all insolvency court decisions through the bourses. Sebi had amended its Listing Obligation & Disclosure Requirement (LODR) guidelines for disclosures by RPs, which were effective from January 8, 2021.
On their part, bourses and brokers will also highlight the stocks of all those companies that are under the IBC process, the NSE release said. In case the insolvency court orders delisting of a company, the exchanges will suspend trading in the stock of that company, the release said. The exchanges will also issue detailed guidelines for disclosures by RPs.
The release also noted that the exchange shall identify the security in a way that will be easy for investors to know that it is currently under the resolution process. “The exchange will continue to provide an alert at the time of order entry informing the market participants that the scrip is undergoing (resolution under IBC).”
Such alerts will be available from the day of admission into resolution process till the day of its suspension or exit from the resolution process, investors will have precise information about the status of that company, the NSE said. If a resolution plan allows the value of the listed stock to be reset at zero and the company is ordered to be delisted, or “where the entire equity capital is reduced/cancelled/extinguished without any payment to the existing shareholders, exchanges in coordination with each other”, trading in the stock should be suspended.
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