Media Release

Media Release 

Manner of dealing with companies undergoing Corporate Insolvency Resolution Process

Mumbai: Friday, July 9, 2021, 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 note.

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 Platform.


  1. 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 proceedings.


·        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. 


  1. 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 BSE

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