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MARKETS News
SEBI’s Reforms go unabated! New norms for Restructuring companies under IBC:
RBI postpones its crucial MPC Meet:
The Board of the Sempanies whose MPS falls below 25% but is above 10% need to bring it up to 25% in three years from the date of fall. The shares of the incoming investors also stay locked in for a year.
This would be tweaked to ensure that after corporate insolvency resolution process (CIRP) companies may be mandated to have at least 5% public shareholding at the time of relisting. In the next 12 months, companies would increase shareholding to 10% and the remaining 10% can be increased in the coming 24 months.
“This is a small threshold but will incentivize companies to remain listed and increase public float, instead of getting delisted,” said one of the persons mentioned above.
“Achieving minimum public shareholding would still be challenging as it is subject to multiple factors such as effective market for dilution, issues surrounding future liquidity, and risk appetite of public shareholders to invest in a company that has gone through an insolvency process,” said Moin Ladha, partner, Khaitan and Co.
The market regulator should consider providing an option to such companies to seek specific relaxations from these requirements for justifiable reasons, he said.
Companies such as Ruchi Soya Industries had seen its shares surge exponentially after it relisted, following its acquisition by Pantanjali Ayurved under Insolvency and Bankruptcy Code. In the six months after the listing, the stock price increased by 8,764%. The company had less than 1% of public float after relisting.
Separately the Securities and Exchange Board of India would also adopt the report by justice A.R. Dave, which recommended steps to improve the market regulator’s enquiry and enforcement processes.
The panel had made recommendations on four main areas, which include avoiding duplication of proceedings to reduce the timeline for passing final orders, improving
recovery processes, quantifying alleged gains while levying penalties, and interplay between Sebi norms and provisions of the IBC.
The Reserve Bank of India on Monday abruptly postponed a meeting of its monetary policy committee (MPC) scheduled to begin Tuesday, puzzling a market waiting for its views on growth and inflation.
“The meeting of the MPC during September 29, 30 and October 1 …is being rescheduled. The dates of the MPC’s meeting will be announced shortly,” an an RBI statement said, without ascribing any reason for the postponement. The rescheduling comes at a time the strength of the six-member MPC is down to half, after the four-year tenure of three external members ended in August.
“Till Sunday, RBI was expecting an announcement from government and was scheduled to hold the MPC meeting,” a person aware of the matter said seeking anonymity.
Investors are requested to study the market news and take appropriate decisons based on that in an alacritic manner.
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