SEBI (Listing Obligations and Disclosure Requirements) Regulation,
2015 ("LODR Regulations") was amended in the year 2018 vide SEBI (Listing Obligations and
Disclosure Requirements) (Third Amendment) Regulations, 2018, and point 16 was inserted in
Para A of Part A of Schedule III of LODR Regulations w.e.f. May 31, 2018, which mandated
disclosures at various stages by companies undergoing Corporate Insolvency Resolution
Process ("CIRP"). This was further amended by SEBI (Listing Obligations and Disclosure
Requirements) (Amendment) Regulations, 2021, which enhanced the disclosure requirement
w.e.f. January 08, 2021.
In the recent past, we 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/consideration to the existing shareholders. However, it is observed that there
is a considerable time lag between the pronouncement of oral Order by NCLT and the final
written order by NCLT. 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.
Accordingly, the following steps shall be initiated:
1. The Exchange shall issue a detailed guidance note to CIRP companies and the
Resolution Professional (RP) on compliance and disclosure requirements as per SEBI
LODR Regulations, which will be uploaded on the Exchange website, an email shall be
sent to all the companies which are under CIRP informing them about the guidance
The guidance note provides that the Resolution Professional has to comply with SEBI
LODR Regulations and in compliance, shall 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 Resolution Professional shall inform through the
Exchange platform any impact on the existing holders / 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/ preference shares/ debentures,
etc. without any payment to such holders, where applicable.
Further, the guidance note provides that the Companies/ the Resolution Professional
shall be guided by the provisions of the SEBI LODR Regulations and shall maintain the
confidentiality of the resolution plan until details are not submitted on the Exchange
2. As soon as company is admitted into CIRP.
The Exchange shall identify and tag the security in a manner, which will be easy for
the members and market participants to know that the security is currently into IBC
The list of securities will also be available on the Exchange website.
The Exchange will continue to provide an alert at the time of order entry informing
the market participants that the scrip is undergoing CIRP. Members shall also be
advised to incorporate this alert promptly in their front-end systems.
Since this alert will be available from the day of admission into CIRP till the day of
suspension of the company/ exit from CIRP proceedings pursuant to NCLT order, the
market participants shall be clearly aware of the status of the company and shall
exercise necessary due diligence will trading in the security.
3. In instances where the Resolution Plan provides that the value of the listed securities is
considered zero and company to be delisted or where the entire equity capital is
reduced/ cancelled/ extinguished without any payment to the existing equity
shareholders, Exchanges in coordination with each other, based on the intimation of the
oral order from the Company / RP confirming the aforesaid provision in the Resolution
Plan, shall suspend the trading in the company on immediate basis.
4. The Exchange will be monitoring on a regular basis the compliance of all companies
under CIRP from a disclosure perspective, and any non-compliances observed will be
reported to SEBI for further action.
About National Stock Exchange of India Limited (NSE):
National Stock Exchange of India (NSE) is the world’s largest derivatives exchange by trading
volume (contracts) as per the statistics maintained by Futures Industry Association (FIA) for
calendar year 2020. NSE is ranked 4th in the world in the cash equities by number of trades as
per the statistics maintained by the World Federation of Exchanges (WFE) for calendar year
2020. NSE was the first exchange in India to implement electronic or screen-based trading. It
began operations in 1994 and is ranked as the largest stock exchange in India in terms of total
and average daily turnover for equity shares every year since 1995, based on SEBI data. NSE
has a fully-integrated business model comprising exchange listings, trading services, clearing
and settlement services, indices, market data feeds, technology solutions and financial
education offerings. NSE also oversees compliance by trading and clearing members with the
rules and regulations of the exchange. NSE is a pioneer in technology and ensures the reliability
and performance of its systems through a culture of innovation and investment in technology.