The National Company Law Appellate Tribunal(NCLAT) has allowed Reliance Industries to delist textile manufacturer Alok Industries, which it has acquired through the insolvency process, in accordance with Sebi guidelines.
The National Company Law Appellate Tribunal(NCLAT) has allowed Reliance Industries to delist textile manufacturer Alok Industries, which it has acquired through the insolvency process, in accordance with Sebi guidelines. A two-member NCLAT bench headed by Chairperson Justice S J Mukhopadhaya has modified the order passed by the National Company Law Tribunal (NCLT), Ahmedabad, which denied such permission.
While approving the Rs 5,052-crore bid of RIL for Alok Industries on March 8, 2019, the NCLT did not give its approval to RIL’s plea for granting exemptions for delisting of Alok Industries’ shares from the bourses. Later, RIL again sought permission, but was denied on July 26, 2019.
“The Appellant (RIL) is directed to comply with the plan forthwith,” said NCLAT. RIL had said that if Sebi allows Alok Industries to be delisted without having to follow the requirement processes set out in the Sebi (Delisting of Equity Shares) Regulation, 2009, then the resolution plan will be deemed to have been amended to provide for delisting of the company’s shares. The Securities and Exchange Board of India (Sebi), in its affidavit filed before NCLAT, said that there is no requirement for its permission for delisting for insolvency bound companies.
Last year, Sebi relaxed requirements to comply with delisting norms for companies facing insolvency proceedings provided the resolution plan lays down the procedure for delisting that particular entity from the exchanges. “In view of the specific plea taken by the Sebi… no further clarification is required. The Resolution Applicant will act in accordance with the stand taken by the Sebi and in accordance with law, if not yet taken. “The order dated July 26, 2019 passed by the Adjudicating Authority (Ahmedabad bench) stands clarified/modified to the extent above,” the appellate tribunal said.
The NCLAT order came over a petition filed by RIL, challenging the NCLT order. The NCLT, in its order dated July 26, 2019, said “that approval of this bench (NCLT) in respect of Face Value Reduction and the Promoter Capital Reduction is/are dispensed with, however the applicant shall approach to the Competent Authority(s) viz MCA and SEBI and any other competent authorities, as the case may be for necessary compliances.”
In its notification last year, the markets regulator had said norms pertaining to delisting of equity shares would not be applicable to any entity that is getting delisted pursuant to a resolution plan approved under the IBC. Alok Industries, a Mumbai-based textile company, was in the first list of 12 companies issued by the Reserve Bank of India in 2017 for initiation of insolvency process.