India: Insolvency Round-up - Other Amendments

Last Updated: 8 August 2018
Article by Manoj K. Singh, Daizy Chawla, Vineet Arora, Himanshu Chawla and Shashwat Singh

Most Read Contributor in India, December 2018

1) Representation of class of financial creditors in the existing Corporate Insolvency Resolution Process.

Section 21(6A)(b) of the I&B Code 2016 read with Regulation 16A of I&B (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations) provides for the mechanism w.r.t representation of class of financial creditors where the number of such financial creditors are of such number as prescribed through Authorized Representative. It provides that the obligation to offer a choice of Resolution Professional who should represent the class of financial creditor is on the Interim Resolution Professional. In Insolvency Resolution Professional will be required to provide the name of three Insolvency Professional in the public announcement and creditors belonging to such class need to name one of such Insolvency Professional. The Insolvency Professional having the maximum votes will accordingly get appointed as Authorised Representative of such class of creditors.

The Insolvency and Bankruptcy of Board of India (IBBI/Board) has recently issued a Circular using its powers given under Section 196(1) (aa) of the Insolvency and Bankruptcy Code 2016 in consultation with Ministry of Corporate Affairs. In the circular, the Board had clarified that in case of ongoing Corporate Insolvency Resolution Process (CIRP) where the class of financial creditors are not represented through Authorized Representative, the Insolvency Resolution Professional will take necessary steps so that the class of financial creditors are duly represented through Authorized Representative by exercising the rights given to him under Section 23(2) which states that Resolution Professional will have all powers and performs the duties as vested or conferred on the Interim Resolution Professional.

Further, the board had further clarified that in cases where the approval of Resolution Plan is at least 15 days away (under Regulation 39(3)), the steps w.r.t appointment of authorized representative to present the interest of class of financial creditor should be taken expeditiously through electronic means.

2) Amendment in Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements), 2009

The Securities and Exchange Board of India (SEBI) has issued the guidelines for preferential issues for prevention of allotment of shares by a company at a low price as compared to the market price. Regulation 70 to 79 under Chapter VII of SEBI (Issue of Capital and Disclosure Requirements), 2009, (ICDR'), have been framed to deal with such intentions of SEBI.

To align with the provisions of the Insolvency and Bankruptcy Code (IBC), 2016, the SEBI on May 31, 2018, has issued notification wherein it had amended Regulation 70 of SEBI (ICDR) Regulations, 2009 as follows:

  1. The provisions of Chapter VII of SEBI (ICDR), except the lock-in provisions, shall not apply where the preferential issue of specified securities is made in terms of the rehabilitation scheme approved by the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985 or the resolution plan approved under section 31 of the Insolvency and Bankruptcy Code (IBC), 2016 whichever applicable.
  2. Earlier under clause (c) Regulation 70(1),the provisions of this Chapter was not applicable where the preferential issue of equity shares was made in terms of the Tribunal under the Insolvency and Bankruptcy Code, 2016. Now the same has been substituted with reference to the resolution plan that will be approved under section 31 of the Insolvency and Bankruptcy Code (IBC), 2016;
  3. Sec. 31(1) of IBC 2016 states that if, the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.

3) Amendment in Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011 (Commonly known as Takeover Regulations)

To give ease for the implementation of approved Resolution Plan in case of Corporate Debtor under CIRP and to keep in align with the spirit of I&B Code 2016 had inserted a proviso to Regulation 3, sub regulation (2) of Takeover Regulations. The newly inserted proviso reads "provided further that, acquisition pursuant to a resolution plan approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 shall be exempt from the obligation under the proviso to the sub regulation (2) of regulation 3". Regulation 3 of the Takeover Regulations provides for the requirement of making public announcements wherever there is a substantial acquisition of shares or voting rights.

Proviso to the sub-regulation 2) provides that where an acquirer even though if following the procedure prescribed under Regulation 3 shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to acquisition above the maximum permissible non-public shareholding.

4) Amendment in Securities and Exchange Board of India (Delisting of Equity Shares) Regulations 2009

SEBI had vide its notification dated 31st May 2018, had amended the Delisting Regulations in order to give a way for approved Resolution Plan of a listed entity. A sub-regulation (3) has been inserted under regulation 3 of the Delisting Regulations. As per the new sub regulations, the regulations will not apply to any delisting of equity shares of a listed entity who is undergoing CIRP and whose plan has been approved under Section 31 of the I&B Code 2016 and such resolution plan provides for procedure to complete the delisting of the shares or provides an exit option to the existing public shareholders at a price specified in the resolution plan.

The new sub regulation further provides that the price to be given for exit to the shareholder should not be less than the liquidation value determined under Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 after paying off dues in the order of priority as defined under Section 53 of I&B Code 2016.

Furthermore, in order to give a parity, the sub regulation provides in second proviso that if the existing promoters or any other shareholders are proposed to be provided an opportunity to exit under the resolution plan at a price higher than the price determined on the basis of liquidation value less the paying off dues then the existing public shareholders shall also be provided an exit option at a price which shall not be less than the price, by whatever name called, at which such promoter or other shareholders, directly or indirectly are provided to exit.

The details w.r.t delisting of such shares along with the justification of exit price in respect of delisting proposed needs to be disclosed to the recognized stock exchanges within one (1) day of resolution plan being approved under Section 31 of the I&B Code 2016. An amendment has also been made in Regulation 30 (Listing of delisted Equity Shares), by inserting sub regulation 2A wherein it has been permitted that an application for listing of delisted equity shares may be made in respect of a company which has undergone CIRP.

5) Amendment in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015

SEBI had vide amendment dated 31stMay2018,and relaxed the listing obligation regulations to be complied by Listed Companies for those companies who are undergoing CIRP. The relaxation includes:

  1. Board of Directors: Insertion of sub-regulation (2A) under regulation 15 which relaxes representation of executive, non­ executive, independent, women directors on board of the Company, committees to be formed by listed companies, etc. considering as per the mandate of I&B Code 2016, during the CIRP the powers of the board vests with Resolution Professional however, the said Resolution Professional shall fulfill all roles and responsibilities which otherwise has been conferred by the regulations on the board.
  2. Approval of shareholder in related party transactions: Further related party transactions which are to be carried out due to Resolution Plan under section 31 of I&B Code 2016 will not require approval of shareholders however the necessary disclosure in this regard needs to be given to the recognized stock exchanges within one (1) day of the resolution plan being approved (sub-regulation 4 to regulation 23).
  3. Disposal of shares of material subsidiary: Company undergoing CIRP is allowed to dispose shares in its material subsidiary resulting in reduction of its shareholding to less than fifty per cent or cease the exercise of control over the subsidiary without passing a special resolution in its General Meeting if same is the condition of approved resolution plan under Section 31 (sub regulation 4 to regulation 24)
  4. Similarly amendments have been made to Regulation 35A, 37 (draft scheme of arrangement and scheme of arrangement).

In Schedule III, part A (Disclosure of events or information: specified securities) a sub clause 16 has been inserted which details the events in relation to CIRP of a listed corporate debtor under the insolvency code which needs to be disclosed to the stock exchanges as and when they occur in terms of Regulation 30.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions