SEBI Directions on Listed Companies going through CIRP

On December 16, 2020, the SEBI Board met for what is its last meeting before the full budget for Financial Year 2020-21. Certain key decisions were announced in relation to shareholding norms for listed companies going through Corporate Insolvency Resolution Process (CIRP). 

Presently, during Corporate Insolvency Resolution Process (CIRP) where the public shareholding falls below 10%, listed companies are required to bring the public shareholding to at least 10% within a period of 18 months and to 25% within 36 months.  Per the Press Release the following has been reported:

"..., the Board has decided the following in respect of companies which continue to remain listed as a result of implementation of the resolution plan under the Insolvency and Bankruptcy Code: 

"i. Such companies will be mandated to have at least 5% public shareholding at the time of their admission to dealing on stock exchange, as against no minimum requirement at present. 

"ii. Further, such companies will be provided 12 months to achieve public shareholding of 10% from the date such shares of the company are admitted to dealings on stock exchange and 36 months to achieve public shareholding of 25% from the said date. 

"iii. The lock-in on equity shares allotted to the resolution applicant under the resolution plan shall not be applicable to the extent to achieve 10% public shareholding within 12 months. 

"iv. Such companies shall be required to make additional disclosures, such as, specific details of resolution plan including details of assets post-CIRP, details of securities continuing to be imposed on the companies’ assets and other material liabilities imposed on the company, proposed steps to be taken by the incoming investor/acquirer for achieving the minimum public shareholding (MPS) and quarterly disclosure of the status of achieving the MPS."

Source: https://www.sebi.gov.in/media/press-releases/dec-2020/sebi-board-meeting_48451.html.