The Insolvency and Bankruptcy Code, 2016 (IBC) has been widely considered a landmark legislation that has brought about a paradigm shift in the recovery and resolution process.Continue Reading 2019 IBC Amendment Bill: Swift Action for Course Correction
Partner in the Capital Markets Practice at the Mumbai Office of Cyril Amarchand Mangaldas. Gaurav focuses on public offerings of securities, including, initial and follow-on public offers, rights issues, institutional placements, bond and depository receipt offerings. Gaurav is also a part of the Firm’s restructuring and insolvency practice group and has extensive experience in buybacks of bonds. He can be reached at firstname.lastname@example.org
Since December, 2000, Indian companies have been permitted to issue ‘dual class shares’. This was when the concept of ‘shares with differential voting rights’ was introduced in the Companies Act, 1956. The Securities and Exchange Board of India (SEBI) has, since July 21, 2009, disallowed listed companies to issue shares with superior rights to voting or dividend. However, listed companies were permitted to issue shares with inferior (or fractional) voting rights.
In an apparent reversal of its policy position, SEBI in its board meeting on June 27, 2019, approved a framework for the listing of companies that have shares with superior voting rights, while disallowing any further issuance of shares for those with inferior voting rights.
Continue Reading DVRs Are Dead, Long Live DVR!
The 2005 Report of the Expert Committee on Company Law (JJ Irani Committee Report) had noted that an effective insolvency law:
“should strike a balance between rehabilitation and liquidation. It should provide an opportunity for genuine effort to explore restructuring/ rehabilitation of potentially viable businesses with consensus of stakeholders reasonably arrived at. Where revival / rehabilitation is demonstrated as not being feasible, winding up should be resorted to.
Where circumstances justify, the process should allow for easy conversion of proceedings from one procedure to another. This will provide opportunity to businesses in liquidation to turnaround wherever possible. Similarly, conversion to liquidation might be appropriate even after a rehabilitation plan has been approved if such a plan was procured by fraud or the plan can no longer be implemented”.
Continue Reading Is Liquidation Irreversible? Schemes of Compromise or Arrangement for Companies in Liquidation
The Reserve Bank of India (“RBI”) has issued the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 (“New Framework”) on June 07, 2019 in which the RBI has continued the core principles of its circular dated February 12, 2018 (“February 12 Circular”) and has added provisions encouraging both informal and formal restructuring in India. The New Framework creates an enabling framework for restructuring and resolutions outside the Insolvency and Bankruptcy Code, 2016 (“IBC”) as well as encourages use of IBC as a restructuring tool. It applies to banks, financial institutions as well as large non-banking financing companies (“NBFCs”) (the February 12 Circular did not apply to NBFCs) and also requires asset reconstruction companies to adhere to the relevant resolution framework under the inter-creditor agreement (see below).
Continue Reading BANKS TO LEAD RESOLUTION EFFORTS – THE NEW RBI FRAMEWORK FOR RESOLUTION OF STRESSED ASSETS
The Securities Exchange Board of India (SEBI) has, over the years, undertaken initiatives to align reporting and disclosure requirements for listed companies in India with global standards, including alignment with the principles prescribed by the International Organization of Securities Commissions. On February 6, 2017, SEBI issued a circular on Integrated Reporting by Listed Entities (SEBI Circular) to strengthen disclosure standards of listed Indian companies.
What is Integrated Reporting?
Integrated reporting is a principle-based reporting framework that was developed by the IIRC. Companies in various countries globally including Japan, the United Kingdom and Australia have adopted integrated reporting.
The primary purpose of an Integrated Report is to provide stakeholders with details in relation to the following: (i) functioning of an organisation; (ii) the value created by an organisation over time; and (iii) various external factors that affect the organisation. The Framework sets out certain fundamental concepts and guiding principles that should be considered while preparing an Integrated Report.Continue Reading Streamlining Reporting Standards