Sebi eases restructuring norms for stressed assets

The Securities and Exchange Board of India (Sebi) has relaxed preferential issue requirements and open offer obligations under SEBI takeover regulations, to enable lenders undertake restructuring of listed companies in distress through Strategic Debt Restructuring (SDR) scheme in terms of the guidelines of RBI.

The move to facilitate turnaround of listed companies in distress will benefit their shareholders and lenders, a Sebi release stated.

Lenders have made representations to Sebi on the difficulties they face on selling acquired shares and divesting these shares to a new investor, as the new investor would need to make a mandatory open offer which would reduce the funds available for investment in the company. Hence, they have requested for exemptions to these investors.

Accordingly, Sebi has decided to extend relaxations to the new investors acquiring shares in distressed companies pursuant to such restructuring schemes. However, such relaxations will be subject to certain conditions like approval by the shareholders of the companies by special resolution and lock-in of their shareholding for a minimum period of three years, Sebi stated.

Further, it has also been decided to extend the said relaxations to the lenders under other restructuring schemes undertaken in accordance with guidelines of RBI.

Sebi also approved the proposal to provide exemption from open offer obligations for acquisitions pursuant to resolution plans approved by NCLT under the Insolvency and Bankruptcy Code, 2016.

At present, in case of an IPO, there are relaxed rules for lock-in provision to Category I AIFs (alternative investment funds). The board has approved a proposal for extending such relaxation to Category II AIFs also. This would bring about uniformity, ease of doing business and expand the investor base available for capital raising.