i. End Use Restrictions to use the ECB proceeds is relaxed for Resolution Applicants under Corporate Insolvency Resolution Process.
The Reserve Bank of India vide its circular dated 07.02.2019 (A.P. (DIR Series) Circular No. 18) has relaxed the applicability of External Commercial Borrowing guidelines in respect to borrowing to be arranged by Resolution Applicants for the Corporate Debtor going through CIRP. Accordingly the end use restrictions which otherwise is applicable w.r.t ECB proceeds raised by eligible borrowers from recognized lenders except the branches/overseas subsidiaries of Indian Banks, for repayment of Rupee term loans of the target company under the approval route will not be applicable in case of Resolution Applicant providing resolution plan w.r.t Corporate Debtor. The Resolution Applicant can proceed with filing the proposal to receive the ECB through the AD Bank to RBI for approval.
ii. Securities Contracts (Regulation) (Amendment) Rules, 2018
Department of Economic affairs vide its notification dated 24.07.2018, have inserted new sub-rule (5) under Rule 19 A of the Securities Contracts (Regulation) Rules, 1957, wherein if the public shareholding in a listed company falls below twenty-five per cent, as a result of implementation of the resolution plan approved under section 31 of the Code, 2016, such company shall bring the public shareholding to twenty-five per cent within a maximum period of three years from the date of such fall.
Further provided that, if the public shareholding falls below ten per cent, the same shall be increased to at least ten per cent, within a maximum period of eighteen months from the date of such fall.
In both scenarios the shareholding will increase in the manner specified by the Securities and Exchange Board of India.
iii. SEBI (Appointment of Administrator) Regulations, 2018
SEBI issued the SEBI (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018 on 3rd October, 2018. These regulations are applicable to all or any of the following:
- Appointment of Administrator pursuant to failure to comply with disgorgement or refund orders passed by SEBI;
- Sale of properties attached by the Recovery Officer of SEBI under the SEBI Act, 1992;
- Collection of claim documents and verification of claims of investors for the purpose of effecting refunds;
- Refund of monies to the investors pursuant to disgorgement or refund orders passed by SEBI;
- Recovery of disgorgement amounts directed by SEBI; and
- Any act incidental or connected to the above.
These regulations apply mutatis mutandis in respect of the proceedings under the Securities Contracts (Regulation) Act, 1956 or the Depositories Act, 1996.
Under these regulations, SEBI shall, after attachment of the properties of the defaulter by the Recovery Officer, appoint an Administrator who is registered IP and empaneled by SEBI from time to time.
The Administrator shall undertake the process of sale of properties after conducting an independent valuation of such properties by a registered valuer referred to in the Companies (Registered Valuers and Valuation) Rules, 2017.
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