SEBI plans to put in place stricter norms for corporate debt restructuring; board to take up proposals in 1 March meet

New Delhi: Regulator Securities and Exchange Board of India (SEBI) plans to put in place a stricter framework for providing exemption from open offer requirements with respect to corporate debt restructuring activities, a senior official said. The markets watchdog has proposed that relaxation might not be given to entities other than lenders in certain conditions as well as do away with the reference to ‘competent authority’ in the context of exemptions provided under its takeover regulations. The proposals are expected to be taken up by the SEBI board at its meeting scheduled to be held on 1 March, the official said. [caption id=“attachment_4254843” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Under the SEBI norms, an entity has to make an open offer in case its shareholding goes beyond a certain threshold. The open offer exemptions under Issue of Capital and Disclosure Requirements (ICDR) regulations as well as under takeover norms could be continued for allotment of shares to lenders pursuant to debt conversion in accordance with RBI norms, the official said. Another proposal is that the open offer exemption might not be made available to “persons (other than lenders), the official added. Since the reference of ‘competent’ authority’ has not been defined, the watchdog is planning to delete it with respect to open offer exemption under takeover regulations. The exemption might be made available only for “scheme of arrangement or reconstruction pursuant to order of a court or tribunal”, the official said. In February 2018, the Reserve Bank of India (RBI) repealed all then existing debt restructuring schemes and prescribed a new procedure regarding resolution of stressed assets. The open offer exemption is also available in case of proceedings under the Insolvency and Bankruptcy Code (IBC).