Pursuant to Insolvency and Bankruptcy Regulations, 2016 coming into effect, listed companies which are going through the insolvency proceedings, are not required to follow delisting procedure pursuant to the resolution plan under the Insolvency and Bankruptcy Code (‘IBC’). The exit price in this case would be in accordance with the procedure laid down in the resolution plan. The final exit plan shall not be less than the liquidation value with regards to the priority as mentioned in Section 53 of the IBC and as decided by the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations,2016. Regulations are framed to protect interest of public shareholders in the same manner as promoter of the listed company.
Following is the list of listed companies which got recently i.e. FY 2020-21, delisted pursuant to resolution plan under section 31 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 3(3)(a) of SEBI (Delisting of equity shares) Regulations, 2009:
Name of Companies delisted under IBC | |
Noble Explochem Limited | Garden Silk Mills Limited |
Axon Ventures Limited | Uttam Value Steel Limited |
Adhunik Metaliks Limited | Empee Distilleries Limited |
Ferro Alloys Corporation Limited | Assam Company India Limited |
As delisting regulation requires lengthy procedure to be followed, such relief in IBC provides relaxation from compliance and costly affairs for obtaining approvals from shareholders and SEBI. Further, it insulates price of such stressed listed company from any price manipulations on the stock exchange on one hand and acquirer can take-over the company at its negotiated price.
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